Question

What are the positives and negatives of a hostile takeover on the company being taken over and their employees.

Answer 1

Hostile takeover refers to forceful acquisition of a company by another company.

Positive of hostile takeover

The shareholders of the target company might get premium to the existing market price

If the company is loss making, with acquistion and good management the company can have better stake in the market which migh benefit the company and the employees.

The value of the target company might also increase if it is underperforming since long time, this would give some hope to the employees.

With proper analysis by the takeover company the company can have best talent in the organisation.

Negatives of a hostile takeover

The Goodwill will be reduced due to hostile takeovers and it may also result in loss of customers of both the companies.

To save cost there might be sacking of many employees which may result in loss of talent and disruption of the company's culture.

Ecnonomic and community issues can also arise in areas where layoffs are high.