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Are corporate takeovers always negative for the form being acquired? What steps can management take to avoid them?

Are corporate takeovers always negative for the form being acquired? What steps can management take to avoid them?

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Answer #1

We cannot generalize the ideology that corporate takeovers are usually negative for the acquired firm. Usually this depends on the type of acquisition and culture management of the 2 companies. If the parent company gives independence to the acquired company, to maintain its business model as well as culture and facilitate the financial assistance for its operations, then the acquisition can be considered quite favorable.

The steps which the management of the parent company can adopt, to make the acquisition process, a favorable one, are:

  • Give intellectual independence to the acquired company to manage its culture and business operations
  • Facilitate financial aid to support the business of the acquired company
  • Respect the culture of the acquired company
  • Substantial job security must be offered to the manpower of the acquired company
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