Figure 1. Classification of types of mergers and acquisitions of companies

Let us dwell on the most common types of company mergers. Depending on the nature of the integration of companies, it is advisable to distinguish the following types:

In turn, three types of conglomerate mergers can be distinguished:

Depending on the nationality of the merging companies, two types of mergers can be distinguished:

– national mergers - association of companies located within the same state;

– transnational mergers - mergers of companies located in different countries ah (transnational merger), acquisition of companies in other countries (cross-border acquisition).

Considering globalization economic activity, V modern conditions a characteristic feature is the merger and acquisition of not only companies from different countries, but also transnational corporations.

Depending on the attitude of the management personnel of companies to a merger or acquisition of a company, the following can be distinguished:

Depending on the method of combining the potential, the following types of merging can be distinguished:

In turn, depending on what potential is combined during the merger, we can distinguish:

Mergers can be carried out on parity terms (“fifty-fifty”). However, experience shows that the “equality model” is the most difficult option for integration. Any merger can result in a takeover.

In foreign practice, the following types of company mergers can also be distinguished:

The type of mergers depends on the situation on the market, as well as on the strategy of the companies and the resources they have at their disposal.

Mergers and acquisitions of companies have their own characteristics in different countries or regions of the world. So, for example, unlike the United States, where, first of all, mergers or acquisitions take place large firms, in Europe there is an absorption of small and medium-sized companies, family firms, small joint-stock companies of related industries.

Historical aspects of the merger

Mergers and acquisitions of companies throughout their history have been undulating. Five most pronounced waves in the development of these processes can be noted:

All these periods are marked by their characteristic features. The main trends in the wave-like development of mergers and acquisitions of companies are given in Table. 1.

The first peak of mergers occurred at the beginning of the nineteenth century. Then the consolidation of enterprises was caused by a change legislative framework and exceptionally unfavorable conditions for doing business. For the first time, companies appeared that took a monopoly position in a number of industries. The ability to significantly influence market prices by manipulating production and supply provided them with particularly high profitability and changed the very essence of the market economy, which was previously based on the principles of free competition.

In a historical retrospective, the surge in mergers of companies engaged in various types of business is very interesting, i.e. mergers of the conglomerate type. The boom of large diversified companies, i.e. conglomerates, fell on the 60s of our century, although large conglomerates were created back in the 20s. But then their creation was initiated by the tasks of the militarization of the economy, and in the 60s the formation of conglomerates took place on a purely commercial basis.

Table 1

Brief description of the most significant periods in the development of mergers and acquisitions of companies

In the 1970s, the active diversification activities of large companies continued, and it was associated, first of all, with the desire to acquire assets in the electronics and telecommunications sectors.

But in the 1980s, conglomerate profits began to decline steadily. Companies that were part of conglomerates performed worse than independent enterprises in the same industries, and new acquisitions brought only huge losses. According to Michael Porter, in the first half of the 1980s, acquisitions by conglomerates of companies in unrelated industries ended in failure in 74% of cases.

In the 1980s, the proportion of conglomerate-type mergers declined significantly. Moreover, the creation of new corporations was accompanied by the destruction of conglomerates that arose 10-20 years ago. During this period, takeovers by competitors by buying their shares prevailed, including hostile takeovers that became very noticeable among them. Given the easing of antitrust laws, horizontal mergers have intensified. So, cases of horizontal mergers can be found, for example, in aviation: the company Northwest in 1986 absorbed the company Republic.

We emphasize once again that mergers with the formation of conglomerates are now the least popular. However, among the companies whose shares are currently traded on the New York stock exchange, forty companies are officially classified as conglomerates. These include such good famous companies like "General Electric", American conglomerates "Textron Inc" and "United Technologies Corp", British "Hanson", Dutch "Philips Electronics", Italian "Montedison", etc. But all these conglomerates have refocused their activities on the segments in which they are leaders. They are currently acquiring companies in key business areas and selling all non-core assets.

In the 1990s, one of the reasons for mergers was to ensure stability in a changing market. In the West, as a result of fierce competition and the uncertainty of the external environment, the horizontal type of merger has become popular. Thus, in the steel industry, for example, due to an excess supply, there was a reduction in the number of enterprises in the industry. The same can be said about companies providing Internet access services. In this industry, uncertainty led to the merger between America Online and CompuServe. In 1997-98, the boom in mergers took place primarily in financial institutions.

From the point of view of experts, the reasons for the surge in mergers in 1998 are associated with the general processes of globalization in the economy, the expected creation of a European economic and monetary union. However, there are specific factors in each specific area of ​​business. For example, the increase in the number of mergers of companies specializing in financial activities, influenced by the growth in demand for the services of these firms, as well as the convergence of previously fundamentally different sectors of the market, banking and insurance.

The largest mergers and acquisitions that took place in the second half of the 90s are shown in Table. 2 compiled from information contained in Acquisitions Monthly.

Commenting on the information contained in Table. 2, it should be noted that all the mergers of companies and banks cited in it are the largest over the past 15 years, and most of them occur in the first half of 1998. These data once again confirm the presence of the next (fifth) wave of mergers and acquisitions of companies.

table 2

Brief description of the largest mergers of companies
in the second half of the 90s

In 1998, there were 26,200 M&A deals, 1,700 more than in the previous year and 2.3 times more than in 1990. The volume of concluded transactions in 1998 increased in comparison with 1990 by almost 5 times.

1998 is characterized by a number of very bright stories in the field of mergers. For example, in November last year, Netscape Communications, a pioneer in the Internet technology market, was bought for $4.21 billion by the world's largest Internet access company, America Online (AOL). Netscape's takeoff was probably the fastest in US history, turning a venture into a multi-billion dollar business in just four years. It all started with the fact that a group of programmers wrote a program for viewing documents on the Internet (browser). The company has created new market, which subsequently began to grow rapidly throughout the world. Initially, Netscape operated alone in this market. Later, the so-called "browser war" begins: Netscape's Navigator and Microsoft's Explorer. As a result of the deal to merge companies, Microsoft has a powerful competitor, because America Online services are used by 14 million people. Another member of the AOL-Netscape alliance Sun company Microsystems, an old competitor of Microsoft. Under the tripartite agreement, Sun will distribute Netscape's high-end computing (server) software, and AOL will use Sun's Java technology to create a new generation of Internet services.

Of interest and are textbook mergers and acquisitions occurring in the automotive industry. Experts predict that only ten of the 18 largest car companies may remain in the next ten years. Before the passions cooled down in connection with the sale of the British automobile company Rolls-Royce Motor Cars, another very significant event took place last year: German company Daimler-Benz merged with the American company Chrysler Corp to form a new corporation. The main goal of this association at first is not so much economies of scale, but the use of a ready-made distribution network in the partner's field of activity and the elimination of double efforts where it exists. In addition, Chrysler Corp plans to start production of Mercedes-Benz sports station wagons at a plant in the Austrian city of Graz. According to The New York Times, American company already produces 50,000 Grand Cherokee jeeps and the same number of Voyager mini-vans at this plant annually. Unequal conditions prevailing in the markets of the USA and Europe, different projected growth rates of partners' profits also led to unequal terms of the merger deal. Daimler-Benz will play the first fiddle in this union, its shareholders can exchange their shares for securities of the new Daimler-Chrysler company at a ratio of 1:1, while for Chrysler Corp shareholders it is set as 1: 0.6235.

Mergers and acquisitions have been a feature of the automotive industry throughout the last century. But it is worth remembering that, for example, Henry Ford was twice ready to sell his company to General Motors (for $ 8 million in 1909). However, General Motors was unable to raise the required amount of cash and thus the two leading automakers remained independent.

The main motives for mergers and acquisitions of companies

The theory and practice of modern corporate management puts forward a lot of reasons for explaining mergers and acquisitions of companies. Identifying the motives for mergers is very important, as they reflect the reasons why two or more companies combined are worth more than individually. And growth in the capitalized value of the combined company is the goal of most mergers and acquisitions.

Analyzing the world experience and systematizing it, we can identify the following main motives for mergers and acquisitions of companies (Fig. 2).

Obtaining a synergistic effect. The main reason for the restructuring of companies in the form of mergers and acquisitions lies in the desire to obtain and strengthen synergistic effect, i.e. the complementary action of the assets of two or more enterprises, the cumulative result of which far exceeds the sum of the results of the individual actions of these companies. The synergistic effect in this case may arise due to:

Rice. 2. The main motives for mergers and acquisitions of companies.

Economies of scale occur when the average cost per unit of output decreases as output increases. One source of these savings is the distribution fixed costs for more units of output. The basic idea behind economies of scale is to do more work with the same capacity, the same number of employees, the same distribution system, and so on. In other words, an increase in volume allows more efficient use of available resources. However, it must be remembered that there are certain limits to the increase in production, if exceeded, production costs can increase significantly, which will lead to a drop in the profitability of production.

Mergers and acquisitions can sometimes provide economies of scale through marketing centralization, such as pooled efforts and sales flexibility, the ability to offer distributors a wider range of products, the use of common promotional materials.

Obtaining economies of scale is especially true for horizontal mergers. But even with the formation of conglomerates, it is sometimes possible to achieve it. In this case, economies of scale are achieved by eliminating the duplication of functions of various workers, centralizing a number of services, such as accounting, financial control, office work, staff development and general strategic management company.

But at the same time, it should be noted that it is usually extremely difficult to integrate the acquired company into the existing structure. Therefore, some companies after the merger continue to function as a set of separate and sometimes even competing divisions with different production infrastructure, research and development marketing services. Even savings due to the centralization of individual management functions may not be achievable. complex structure corporations, primarily of the conglomerate type, on the contrary, can lead to an increase in the number of administrative and managerial personnel.

A merger may be appropriate if two or more companies have complementary resources. Each has what the other needs, and so merging them can be effective. These companies after the merger will be worth more than the sum of their values ​​before the merger, since each acquires what it lacked, and receives these resources for less than they would cost it if it had to create them on its own.

Mergers in order to obtain complementary resources are typical for both large firms and small enterprises. Often, small enterprises become the object of absorption by large companies, as they are able to provide the missing components for their successful functioning. Small enterprises create sometimes unique products, but lack the production, technical and marketing structures to organize large-scale production and sale of these products. Large companies, most often, are able to create the components they need themselves, but you can get access to them much cheaper and faster by merging with a company that already produces them.

monopoly motive. Sometimes, during a merger, primarily of a horizontal type, the decisive role is played (openly or secretly) by the desire to achieve or strengthen its monopoly position. The merger in this case allows companies to curb price competition: prices due to competition can be reduced so much that each of the producers receives a minimum profit. However, antitrust laws restrict mergers with the clear intent to raise prices. Sometimes competitors can be acquired and then closed because it is more profitable to buy them out and eliminate price competition than to lower prices below average. variable costs, forcing all manufacturers to bear significant losses.

Benefits from the merger can be obtained due to savings on costly works on the development of new technologies and the creation of new types of products, as well as on investments in new technologies and new products. One firm may have outstanding researchers, engineers, programmers, etc., but not have the appropriate manufacturing capacity, distribution network, necessary to capitalize on the new products they develop. Another company may have excellent distribution channels, but its employees lack the necessary creativity. Together, both companies are able to function fruitfully. Through mergers, cutting-edge scientific ideas and the funds needed to implement them can also be combined.

Young technologically advanced industries associated with the production and use of science-intensive products, technological innovations, and highly complex equipment are becoming main area merger interests.

Improving the quality of management. Eliminate inefficiency. Mergers and acquisitions of companies may aim to achieve differential efficiency, meaning that the management of the assets of one of the firms was inefficient, and after the merger, the assets of the corporation will become more effectively managed.

If desired, you can always find companies in which the opportunities to reduce costs and increase sales and profits remain untapped, companies that suffer from a lack of talent or motivation of leaders, i.e. companies with inefficient management apparatus. Such companies become natural candidates for takeover by firms with more efficient systems management. In some cases, "more than effective management” may simply mean the need for a painful reduction in staff or a reorganization of the company.

Practice confirms that the objects of acquisitions, as a rule, are companies with low economic indicators. Research shows that in acquired companies, actual rates of return were relatively low for several years before they were taken over by other firms.

Of course, mergers and acquisitions should not be considered the only possible means of improving management methods. Of course, if the restructuring will improve the quality of management, then this in itself is a fairly strong argument in its favor. However, sometimes you can overestimate your ability to manage a more complex organization and deal with unfamiliar technologies and markets. Nevertheless, in some situations, these procedures represent the simplest and most rational way to improve the quality of management. After all, managers, of course, will not make decisions to dismiss or demote themselves for inefficient management, and shareholders of large corporations do not always have the opportunity to directly influence the decision of who and how exactly will manage the corporation.

tax motives. The current tax legislation sometimes stimulates mergers and acquisitions, the results of which are tax cuts or tax incentives. For example, a highly profitable firm with a high tax burden may acquire a company with large tax benefits that will be used for the created corporation as a whole.

A company may have the potential to save on tax payments to the budget through tax incentives, but its profit margins are not sufficient to really take advantage of this advantage.

Sometimes, after bankruptcy and a corresponding reorganization, a company may exercise the right to carry forward its losses to taxable deferred profits. It is true that mergers undertaken solely for these purposes tax office The United States, for example, regards them as doubtful, and in relation to them, the loss carry-forward principle can be canceled.

Production diversification. Ability to use redundant resources. Very often, the reason for mergers and acquisitions is diversification into other types of business. Diversification helps to stabilize the income stream, which benefits both the employees of the company, and suppliers, and consumers (through the expansion of the range of goods and services).

The motive for the merger may be the appearance of temporarily free resources in the company. Suppose it operates in an industry that is in the stage of maturity. The company generates large cash flows but has few attractive investment opportunities. Therefore, such companies often use the resulting cash surplus to carry out mergers. Otherwise, they themselves may become the object of absorption by other firms that will find use for excess cash.

This motive is associated with hopes for a change in the structure of markets or industries, with a focus on access to new important resources and technologies.

The difference between a company's market price and its replacement cost. It is often easier to buy an existing business than to build a new one. This is useful when the market value property complex of the target company (target company) is significantly less than the cost of replacing its assets.

The difference in the company's market price and replacement cost arises from the mismatch between the market and book value of the firm being acquired. The market value of a firm is based on its ability to generate income, which determines the economic value of its assets. If we talk about a fair assessment, then it is the market value, and not the book value, that will reflect the economic value of its assets, and, as practice shows, the market value is very often less than the book value (inflation, moral and physical depreciation, etc.).

Difference between liquidation and current market value (scatter sale). Otherwise, this motive can be formulated as follows: the possibility of “buying cheap and selling expensive”. It is not uncommon for a company's liquidation value to be higher than its current market value. In this case, the firm, even if it was acquired at a price slightly higher than the current market value, can later be sold "scattered", in parts, with the seller receiving a significant income (if the firm's assets can be used more efficiently by selling them in parts to others). companies, there is a semblance of synergy and synergy effect). In general, from the point of view of expediency, liquidation should take place when the economic gains outweigh the economic losses.

Managers' personal motives. The desire to increase the political weight of the company's management. Of course, business decisions regarding mergers and acquisitions of companies are based on economic feasibility. However, there are examples when such decisions are based more on the personal motives of managers than on economic analysis. This is due to the fact that company leaders love power and claim higher wages, and the boundaries of power and wage are in some way related to the size of the corporation. Thus, the desire to increase the scale of companies was facilitated by the use of options as a means of long-term incentives. These options made up a significant portion of the managers' pay and were linked to the cost of capital of the company they led. In this regard, there are direct incentives to use profits to acquire more and more assets in all areas of business.

Sometimes the reason for a company merger is the overconfidence of executives who believe that the proposed transaction is perfect. They are imbued with the excitement of the hunt, in which the prey must be overtaken at any cost. As a result, such buyers pay very dearly for their purchases.

In addition to traditional motives for integration, there may be specific ones. Thus, mergers for Russian companies represent one of the few ways to resist expansion into Russian market more powerful Western competitors.

Mechanism of mergers and acquisitions of companies

In order for a merger or acquisition to be successful, you must:

The following organizational forms of mergers and acquisitions of companies are possible:

Mergers and acquisitions of companies can be carried out as follows:

In order for the merger to be successful, even when planning it, it is necessary to take into account the requirements of antitrust laws. All major mergers and acquisitions are monitored from the very early stages. In the US, for example, both the Department of Justice and the Federal Trade Commission have the power to seek a court order to stay a merger. True, in recent years only a few mergers have been canceled on the basis of antitrust laws, but such a threat exists constantly.

A takeover of a company can be both taxable and tax-exempt. If the shareholders of the acquired company are considered by the tax authorities as sellers of shares, then they must pay tax on capital gains. If the shareholders of the acquired company are considered as persons exchanging old shares for the same new ones, then neither the increase nor the loss of capital is taken into account in this option.

The tax status of this transaction also affects the amount of taxes that the company pays after the takeover. When a transaction is recognized as taxable, the assets of the affiliated company are revalued, and the resulting increase or decrease in their value is treated as profit or loss subject to taxation. If the transaction itself is declared tax-free, the combined company is treated as if both merged companies have existed together forever, so the transaction itself does not change anything in the application of the tax mechanism to them.

Analysis of the effectiveness of mergers and acquisitions of companies

Sometimes there is an erroneous opinion among managers that the rules for determining the effectiveness and attractiveness of a merger deal are simple. It is enough to acquire a company from a growing industry or buy it at a price below the book value.

But all this is by no means unambiguous. When evaluating the effectiveness of this type of company restructuring, many factors must be taken into account.

When a company is purchased, funds are invested. Therefore, it is possible to apply the basic principles of decision-making about long-term investments. However, evaluating the effectiveness of a merger or acquisition is often very difficult due to the following points:

Buying a company is not comparable to buying a new machine, equipment, the first one is much more complicated. Various approaches are used to evaluate the effectiveness of such a transaction. Very often, the analysis of a merger or acquisition begins with a forecast of the future cash flows of the company that is going to be taken over. Such a forecast includes any increase in revenue or decrease in costs due to a merger or acquisition, and then discounts these amounts and compares the result with the purchase price. In this case, the expected net benefit is calculated as the difference between the discounted cash flow of the acquiree, including the benefits of the merger or acquisition, and the cash required to complete the transaction.

If the present value of the expected incremental cash flow from the merger exceeds the price to be paid for the acquiree, then the acquiring firm may be purchased.

In this case, the analysis of the effectiveness of a merger or acquisition of companies provides for:

The approach discussed above does not always give objective results. Even a well-trained analyst can make serious miscalculations in estimating the value of a company. The expected net benefit may turn out to be positive, not at all because the merger is really effective, but only because the future cash flows of the target company are overly optimistic. On the other hand, a truly expedient merger may not take place if the potential of the acquired company is underestimated.

It is more expedient to first understand why two or more companies, united, will cost more than separately, to assess the possible economic benefits and costs.

The economic benefits of a merger arise only when the market value of the company created as a result of the merger or acquisition is higher than the sum of the market values ​​of the firms that formed it before they were combined.

These benefits represent a synergistic effect, which has been discussed a lot when considering the motives for mergers and acquisitions of companies. The calculation of the synergy effect is one of the most difficult tasks in the analysis of the effectiveness of mergers.

If there is a synergistic effect, the merger or acquisition is considered economically justified and you can proceed to the assessment costs for its implementation.

Assuming that when the target company is acquired, its market value is paid immediately, then the cost of acquiring the company can be defined as the difference between the prices paid for it in cash and market value of the company.

Merger costs are the premium or premium that the acquiring company pays for the target firm over and above its value as a separate economic unit.

By this amount, the shareholders or owners of the acquired company will receive more than the market value of their company. But what is a gain for them is a cost for the shareholders of the acquiring company. In most cases, however, the gain for the target (acquired) company is lower than the costs of the acquiring company, since certain amounts are paid to investment banks, consultants, lawyers, accountants.

The net present value for the acquiring company arising from the acquisition of another company is measured by the difference between the above benefits and costs.

If the net present value of a company's merger or acquisition transaction is positive, then the corresponding transaction is economically justified and can be recommended to be carried out.

In the course of analyzing the effectiveness of mergers and acquisitions of companies, it seems appropriate to evaluate the possible reaction of investors. If the share price of the acquiring company falls after the announcement of the upcoming deal, this will mean that investors are essentially signaling to its managers that they believe the benefits of the takeover are dubious or that the acquiring company is going to pay more for the target company than required .

In addition, it must be borne in mind that in the process of buying a company, a situation often arises similar to an auction, i.e. firms-buyers compete with each other. You need to be very careful when deciding whether to participate in such an “auction”. It can cost more to win than to lose. In the event of a loss, only time may be lost, and in the event of a victory, the purchased company may be paid too dearly.

Consequences of mergers and acquisitions of companies

Mergers can improve the efficiency of the merged companies, but they can also worsen the results of the current production activities, strengthen the burden of bureaucracy. Most often, it is very difficult to estimate in advance how big the changes caused by a merger or acquisition can be. But the results of many studies on measuring the net effect of mergers and acquisitions already carried out give very contradictory, often completely opposite, conclusions.

According to the Mergers & Acquisitions Journal, 61% of all mergers and acquisitions of companies do not return the funds invested in them. And Price Waterhouse's study of 300 mergers over the past 10 years found that 57% of mergers and acquisitions lag behind peers in the market and are forced to re-divide into separate corporate units1.

Experts usually point to three reasons for the failure of mergers and acquisitions:

Acquisition companies sometimes misvalue the assets of the companies they are interested in or their liabilities. For example, you might underestimate the costs associated with upgrading equipment in this company, or its warranty obligations for defective products. Security obligations of the acquired company may significantly affect the effectiveness of the merger environment. If the operations of this company lead to environmental pollution, all costs in this case, most likely, will be placed on the shoulders of the acquiring company.

Very often, the necessary investments for the implementation of a merger or acquisition transaction are underestimated. Errors in estimating the value of a future transaction can be very impressive. For example, in the takeover of BMW by Rover, the approximate cost of the latter was 800 million pounds, and the investments needed in the next five years after the merger were 3.5 billion.

Many mergers that seemed to make economic sense failed because of mistakes made in the process.

Sometimes managers could not cope with the difficulties caused by the integration of two companies with various features production process, accounting, corporate culture.

The value of many companies directly depends on such specific assets as human resources, – professionalism of managers, qualification of workers, engineers, researchers. The change of the owner leads to a revision of the established criteria for assessing personnel and career planning traditions, to a change in spending priorities, to a change in the relative importance of individual management functions and, consequently, to a break in the informal structure. In addition, if the managers of the acquired company have a certain share in its capital, their instantaneous transformation from owners to employees negatively affects motivation, and as a result, they begin to work worse. If these professionals do not feel satisfied with their position in the new company formed after the merger, the best of them will leave it.

Analytical studies of mergers that have taken place show interesting results: it turns out to be more profitable to sell a company than to acquire someone else's. In most cases, the shareholders of the companies that acted as sellers in the mergers or acquisitions received very significant benefits, while the shareholders of the acquiring company benefited much less. This can be explained by two reasons:

First, acquiring companies, as a rule, are always larger than those being acquired. In this case, if the net benefits of the merger or acquisition are evenly distributed between the two companies, the shareholders of each company will receive the same profits in absolute terms, but in relative, or percentage terms, the profits of the shareholders of the acquired company will be much higher.

Secondly, competition between buyers significantly contributes to this process. Each subsequent applicant for the purchase of the company seeks to surpass the conditions put forward by the previous one. At the same time, an increasing part of the profit from the upcoming merger transaction goes to the shareholders of the acquired company. At the same time, the managers of the company they are about to take over can take a number of anti-takeover measures to ensure that the sale of their company, if it occurs, occurs at the highest possible price under the given conditions.

Within the framework of large corporations formed as a result of a merger or acquisition, a phenomenon often occurs that is called sub-optimization in economics. Its essence is as follows: within a corporation, the desire to strengthen intra-group cooperative ties usually prevails, to buy mainly from “their own”. At the same time, each “own” company, naturally, seeks to set a price that brings maximum profit. As a result, either the output becomes too expensive and uncompetitive, or ordinary commercial price negotiations turn into endless discussions of mutual claims. The more complex the system of cooperative ties within a corporation, the more difficult it is to build and debug the system transfer prices satisfying firms at different ends of the cooperation chain.

The mechanism for protecting companies from takeovers

In many cases, mergers and acquisitions are carried out by mutual agreement between the senior management personnel of both companies. However, the practice of hostile mergers is also not uncommon. As we have already noted, hostile mergers and acquisitions are mergers in which the management of the target company (target company) does not agree with the upcoming transaction and implements a series of anti-takeover measures. In this case, a company that would like to acquire the firm that is interested in it, bypassing managers, addresses directly the shareholders of the target firm. There are two possible ways hostile takeover of the company with the involvement of its shareholders.

The most common of these is direct offer to purchase a controlling stake or otherwise tender offer shareholders of the target company.

Another way is called fight for power of attorney , since it involves obtaining the right to vote with other people's shares, i.e. proxy voting. In this case, they try to find support among a certain part of the shareholders of the target company at the next annual shareholder meeting. The pursuit of voting proxies is costly, and it is difficult to emerge victorious from this struggle.

Managers of companies, resisting a proposed takeover, can pursue two goals:

When capturing more or less successful company, especially when management resists, a significant portion of the funds must be paid as a premium to shareholders for the loss of control. In most cases, the premium ranges from 20% to 40% of the “fair” market value of the company.

In some cases, to mitigate the contradictions between companies, the managers of the acquired companies are provided with so-called “golden parachutes”, i.e. hefty severance pay in case they lose their jobs as a result of the takeover. Most often, these benefits are paid by the acquiring company, but sometimes by the shareholders of the target firm, so that managers do not interfere with the takeover transaction. At times, such benefits can reach large amounts: for example, the shareholders of Revlon offered the president of the company $35 million.

As a result, given the shareholder bonuses and the amounts spent on giving the management team “golden parachutes,” the cost of taking over a company can be prohibitive. The colossal funds invested in takeover projects often only lead to the destruction of the property of the shareholders of the acquiring company.

Known in world practice whole system anti-takeover measures that managers use to counter unwanted transactions. In table. 3 and table. 4 we have tried to summarize the most interesting of them and the most applicable in practice.

Table 3

Basic techniques for protecting a company from a takeover before the public announcement of this transaction

Table 4

The main techniques for protecting a company from a takeover after a public announcement of this transaction

Sources of information for the table. 1 and table. 2:

1. R.S. Ruback. An Overview of Takeover Defenses//Working Paper No. 1836-86. Sloan School of Management, MIT. September. 1986. Tab. 12.

2. L. Herzel & R.W. Shepro. Bidders and Targets: Mergers and Acquisitions in the U.S. Basil Blackwell, Inc., Cambridge, Mass., 1990, Chap. 8.