Hostile Takeover and Ethics

Mergers and takeovers are forms of external growth within a business. External growth occurs when one firm decides to expand by joining together with another. A takeover specifically refers to the gaining control of a firm by acquiring a controlling interest in its shares (51%). Merger, on the other hand, means the joining with another firm to form a new combined enterprise, shares in each firm are exchanged for shares in the other.

• Transaction structures—the takeover could involve a cash offer, a share offer, an asset swap or a combination of these methods. Need to consider legal, taxation and accounting issues.

of the acquiring corporation . . . , and the acquiring corporation must be in control of the other corporation immediately after the

Negotiations are something that everyone experiences and does at some level. Even if informal, people negotiate and barter using what they have to offer to get what they want all of the time. However, there are times in life where the negotiations are much more serious and the stakes a lot higher. Whether official or unofficial, there are negotiation tactics and conditions that should be watched out for because they are a sign of potential problems.

Part 1:What is a hostile takeover and what generally happens to the stock price of the firm being acquired in a hostile takeover?

“Business ethics is the application of ethical values to business behavior. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their employees and suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, about discretionary decisions and behavior guided by values. Business ethics is relevant both to the conduct of individuals and to the conduct of the organization as a whole.” With this statement can we say that Fingerhut’s price strategy is unethical? In order to answer this question we need to digest certain issues of “Fingerhut’s Price Strategy” case with the point of views of Roger Crisp “autonomy and creation

Hostile takeovers are no longer common as they were in the 1980s. However, legal and ethical issues still surround mergers and takeovers (Thomas, 2009). This document examines and identifies legal and ethical issues which the merging parties should consider before, during and after a merger. The document will also look at measures of managing these legal and ethical issues.

Target firm remains as a shell company, but its assets are transferred to the acquiring firm. Ultimately, target firm

Since more structured analytical tools, is likely to propose solutions mechanics for politically complicated issues, the formal procedures evaluation should not prevent the emergence of spontaneous informal contributions the decision-making process; Serve as a mechanism to communicate the company's goals and the staff of the involved parties. The analytical concepts and Content contained therein can help administrators to implement a program for acquiring which is robust, consistent and cost- justifiable (and WEINHOLD SALTER, 1981). According to Salter and Weinhold (1981), there are two approaches to making a acquisition function. The first emphasizes the strategic fit between the acquired companies for strategic objectives of the acquiring company. The second emphasizes the need to achieve organizational fit between the two companies combining systems administrative, company cultures or demographic characteristics. Sufficient degree of strategy and organization ensure success of the acquisition. Jemison and Sitkin (1986) identified the following factors inherent in the process can affect the outcome: fragmented aspects - The involvement of experts and analysts particular expertise and independent objectives, often carry multiple fragmented views. These experts, usually or often dominate the process of making a purchase due to the technical complexity of required analysis. Moreover, few of those involved experts have operational experience of the segments of

Mergers and acquisition plays an important role in survival/vitalization of a corporation in today’s market. It continues to be a breakthrough strategy for improving innovation of a company’s product or services, market share, share price etc.

Now I do not mean giving up things like your money to keep the business running. I mean, in this case, the owners giving up their expensive car and boat to keep the business alive and well. This connects to managing money because it doesn’t make any sense whatsoever that you need a BMW and a boat when your business is struggling with money. The owners weren’t willing to give up those things at all to keep their business which disgusts me. Another thing is that their previous store burnt down. They were given a lot of money because of all sorts of stuff from their insurance company but they still fail to contribute the money to the business. That is not ethical at all that you are not smart with all of your insurance money and you have theses expensive items that you don’t need, and not to mention, you are $900,000 in debt. Their daughter needed some different people to run the business with. Then the business may have succeeded with the profit’s help.

The corporate raiders will target companies with high value, and this is perfectly logic because nobody will attack a company that has a value less than the expenditures to be incurred or is so well protected that the takeover is impossible.

* The acquirer is the combining entity that obtains control of the other combining entities or businesses.

Therefore, managers’ motives significantly determine the result of the takeover as they may act to maximize their utility and empire building instead of the value of shareholders (Zalewski, 2001:140). Some managers face employment risk and, therefore, may also undertake mergers and acquisitions to reduce this risk rather than reward the shareholders (Weston, Siu, & Johnson, 2001:204). In addition, managers’ salaries, bonuses, social status and promotions have a direct relationship with the size of the firm. This divergence between motives and interests of managers give rise to the agency problem. Therefore, managers will accept a return on investment that is below that is required by the shareholders (Jensen & Merckling,

When a principality is acquired through an acquisition of a non-hostile nature, it is the prince who may have fears. The prince of a “mixed principality” faces more difficulties than those of a hereditary principality. Machiavelli suggests that these “difficulties derive from one natural problem inherent in all new principalities: men gladly change their masters, thinking to better themselves” (8). Additionally, the new prince is, out of necessity, going to offend his new subjects by bringing in “his soldiers and [causing] other countless injuries that are involved in his new conquest” (8). These same problems will face the management of a newly acquired business. Those employees that are retained will automatically look to better their current position by less than honest means. Those “left over” from the old regime may be inclined to steal from the company out of fear that they may soon be replaced. Thus, endangering the already financially unstable situation that an acquisition puts a company in. Therefore, measures must be taken to ensure that the state/company not be lost due to an uprising by the