COMMERCE 3FA3 Chapter Notes - Chapter 23: Scorched Earth, Takeover, Car Rental
6 Dec 2017
School
Department
Course
Professor
Document Summary
Some of the special problems that come up in this area of finance include: The benefits from acquisitions can depend on such things as strategic fits. Strategic fits are difficult to define precisely and it is not easy to estimate the value of strategic fit using discounted cash flow techniques. There can be complex accounting, tax, and legal effects that must be considered when one firm is acquired by another. Acquisitions are an important control device for shareholders. Agreeing to be acquired by another firm is one way that shareholders can remove existing managers. Margers and acquisitions can involve unfriendly interactions. The sought-after firm usually resists takeover and may resort to defensive tactics with exotic names such as poison pill or green mail. There are three basic legal procedures that one firm can use to acquire another firm: 1. The legal forms of acquisitions: merger or consolidation, acquisition of stock, acquisition of assets.
