In international practice, it is customary to divide methods of protection against hostile takeovers into two main categories:
Many business owners mistakenly believe that they are safe, while competitors have long been working to seize control of their enterprises. Human nature generally has the vice to take and appropriate for itself everything that lies badly and business that is in no way protected from unfriendly absorption has always been, is and will be a tasty booty. What can I say, because there are entire companies specializing exclusively in such seizures of foreign enterprises.
That is why it is so important to apply a number of certain preventive measures to protect your "overworked" business. These measures include the following:
- Continuous research to detect suspicious business interest. Before carrying out the seizure, the aggressor company, by hook or by crook, will try to get as much information as possible about the target company. It is on the basis of this very information that the absorption strategy will be built. Lawyers and, of course, the company's economic security service should constantly monitor all fluctuations in the information field around the company;
- Analysis of your business in the light of the legal aspect. The bottom line is that the aggressor company will by all means cling to all the inaccuracies found to it, and even more so will not miss the opportunity to draw on direct violations of the current legislation. It is in the interests of the invader to maximize his potential booty in the power of various kinds of proceedings and litigation. Therefore, it is necessary to make a proactive maneuver, find the vulnerable “pain points” of your business and, if possible, eliminate them, and if it does not work out, then at least “lay the straw”;
- Business diversification. There is no need to “keep all the eggs in one basket”, namely, to concentrate management, production, trading and ownership functions within one company. In this case, the task of the aggressor will be greatly simplified and to seize control of the business, he will be able to concentrate all his forces on one object. In world practice, diversification of the business according to the “four corners” scheme is widely used. This is when all the functions of a business are not concentrated within one company, but are divided into four main areas. One company is engaged exclusively in production, the second in trading, the third owns assets, and the fourth concentrates the core of management;
- Analysis and search for vulnerabilities in the company's statutory documents. It is here that attackers can find the very loophole that will allow them to take control of the business. All the points regarding the holding of early meetings and decision-making on them, the formation / liquidation of the executive body of the company and the powers vested in it, the possibility of transactions with certain assets of the enterprise, etc., should be clearly and clearly spelled out;
- Development of a set of measures to protect information with confidential status. This includes the rules of communication with the press, the procedure for providing information to any other third parties, and the signing of non-disclosure agreements with employees who have access to a certain type of information. It goes without saying that computer security also applies to these measures – server protection and the introduction of information access procedures;
- Consolidation of company shares in the hands of owners and top management, or the organization of the so-called cross-ownership of shares (with the organization of a subsidiary with more than 50% of the share capital). When spraying a large share of shares in small shares among many minority shareholders, one may encounter the fact that at one fine moment (wonderful for the aggressor company) these small shares will be bought out and collected in a blocking, or even a controlling block of shares. In this case, as you understand, floundering will be pointless and the control over the company will actually be lost;
- Control over the accounts payable of the company is required for the simple reason that the aggressor can simply buy your debts from the creditors and arrange so that a number of assets of the target company will be arrested, and then activate the bankruptcy procedure.
The category Post-offer defense includes those measures that are taken after the aggressor company has actively shown its intentions and set about capturing the target. In this case, there is no time left for much thought and the introduction of any strategic protective measures. It remains only to act, and act decisively and as quickly as possible.
What actions can take in this case? Here is a list of the main ones:
Start a counter-purchase of the company's target stock. Moreover, the purchase can be carried out both by the target company itself and by its friendly companies. This method can be very time-consuming and, moreover, requires significant capital investments, and therefore it is not always effective enough;
To carry out an additional issue of shares. An additional issue of shares can greatly complicate the task of the aggressor company in capturing a blocking or controlling stake and, as a result, can lead to the rejection of takeover;
Transform a joint stock company into a limited liability company. The measure is quite effective, but can be implemented only with the number of shareholders not exceeding fifty people. It should be borne in mind that if after this kind of reorganization one of the shareholders decides to leave the company, then he will have to pay his share;
To reduce the attractiveness of the target company in the eyes of the aggressor by concluding agreements for the lease of part of the assets The bottom line is that the lease agreement cannot be terminated unilaterally (without the tenant’s consent) and the ardor of the aggressor can be greatly reduced when he finds out that the tidbits that he wanted to get through absorption will not reach him for a very long time. It is advisable to conclude such lease agreements with friendly companies, friends, relatives, in a word, so that for the company they have a more likely conditional character and it could be terminated if necessary;
Re-registration of the target company in another region, for example, with tougher antitrust laws, can also greatly complicate the work of the invader. The increase in the complexity and cost of the capture process may lead to the fact that the aggressor considers the absorption impractical;
Arrange a merger with a friendly company. This kind of “horseback riding” will minimize the likelihood of an unfriendly takeover, but here it is necessary to take into account the advisability of such a merger (would it not be that the interests of the target company would be severely damaged);
Litigation, litigation and lengthy litigation allows you to tie the aggressor, which is called "hand and foot" preventing him from continuing to absorb, or greatly slowing down this process, thereby allowing you to win the time necessary for the introduction of other methods of protection.