Friendly Takeover (Company) - Explained
What is a Friendly Takeover?
Written by Jason Gordon
Updated at April 16th, 2022
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Table of Contents
What is a Friendly Takeover?How does a Friendly Takeover Work? Academic Research on Friendly TakeoversWhat is a Friendly Takeover?
A friendly takeover refers to a proposal where the managerial level and executives of a target organization confirm a merger or acquisition by some other firm that involves approval from the shareholder and U.S. Department of Justice (DOJ).
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How does a Friendly Takeover Work?
During a friendly takeover, the acquiring company sends out a public stock offering or cash, and the management of the target company gives approval to the buyout conditions, which may also include the approval of shareholders and regulatory parties.
It is different from a hostile takeover where the target firm doesn't give approval to the buyout, and tends to save itself from being acquired. Mostly, if the board of directors says yes to a buyout agreement of an acquiring company, the shareholders will approve the decision too. The acquiring firm provides a premium to the existing market price, but the amount of the premium amount will ascertain the total support for the buyout within the target firm.
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