Takeover Artist

  

Categories: Entrepreneur

See: Takeover.

Someone who's really good at taking over companies. What makes them good? Well, there are really two elements here. The buying comes first. Can they find the right fragile company that's stumbling, thanks to bad management? Or is fighting upstream in an environment now heavy with tech, but where they're not equipped to fight? Maybe they have blocks of angry frustrated shareholders and insiders who, for a modest premium in stock price, would sell out enough blocks of stock so that the takeover artist now controls the company.

So the buying is a combo of gentle massage and axe-murdererness, with gentle threats and FUD-wringing all over the place. That's the first part. The second is the operations of the company, performed way better after it's been bought. Like...does the artist know how to deal with long form union contracts? Can they source from Mexico and China and save 500 basis points in costs? Can they refinance debt from the Germans on better terms? Can they technologify things and make the product hip and cool again, so that stores actually want to stock it without big checks upfront?

That's all part of the art, yes, The art of the deal, more or less.

Related or Semi-related Video

Finance: What is a Hostile Takeover?24 Views

00:00

Finance a la shmoop what is a hostile takeover?

00:06

alright nose plugs 4 less has been run poorly for a decade it used to be the [Man discussing company with nose plugs]

00:12

dominant nose bleed preventer in the industry but after years of you know

00:17

leakage the stock has come all the way down from a hundred bucks a share to

00:21

twenty dollars today frustrated investors who bought in at a hundred and

00:25

then 80 and then 72, 53, 45 and 33 have written

00:29

reams of complaint letters to the board who just doesn't seem to listen to what [Man angrily typing complaint on keyboard]

00:33

is an obvious fix well they have to fire the CEO and put someone in power who

00:38

will you know stop the bleeding but they won't for whatever reason the board is

00:43

remaining loyal to the CEO so now these angry shareholders and yes they are

00:48

hostile well, they get together and openly try to buy the company under a

00:53

process where they buy off as many shares as they can common shares they

00:58

team up among themselves yeah and then finally when they have a majority

01:02

ownership in the company or at least enough to sway the vote they start [Pie chart appears with hostile shareholders]

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electing new board members with their common share votes

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you know board members who actually listen to them remember that it's the

01:14

common shareholders who elect the board here people then the board hires the CEO

01:18

who hires well pretty much everyone else and hostile takeovers still happen these

01:23

days or at least get threatened here's one of the juicier ones and arguably one

01:27

of the worst wealth destroying deal passes in history when Microsoft tried to

01:31

go hostile and by Yahoo in 2008 and the board didn't listen and while they ended [Man with microsoft briefcase for head giving presentation]

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up selling for less and so here's kind of the letter yeah you can kind of skim

01:55

So went on and on Yahoo past and while bad things [Microsoft merge failure newspaper article appears]

01:59

happened so hostile takeovers do they happen to well-run good companies who

02:03

were doing well? well generally no they're only bad for poorly run

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companies and actually good for the shareholders because hostile takeovers

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usually mean the share appreciates in value

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and so then the common shareholders who actually own the company well at least

02:17

they eventually get paid at least something closer to a fair price so yeah

02:21

the best way to avoid a hostile takeover well as always to plug the leak before [CEO plugs in nose plugs]

02:25

it you know gets to be a problem

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