Ako imate pametnijeg posla od odlaska u banku

The process by which one company becomes the owner of another is called a takeover or acquisition since the process of buying is realised through the acquisition of over 50% of a company’s shares. These changes come about as a result of a strategic decision on the part of the company’s management. In business, growth still means going down, and the only way to stay afloat is by growing through taking over or itself being taken over by a bigger system.

Perceived cons of a takeover differ from case to case but may include reduced competition and choice for consumers, fears of price increases and job cuts as well as problems arising from cultural integration and conflict with new management. Advantages of growth through takeovers rather than organic growth are numerous; a company can spread its business through a well-established system as, even when on the brink of bankruptcy, the company which has become a target still has valuable assets and infrastructure that can add value to the new owner. This value can be seen as an increase in sales, market share and economies of scale.

Apart from that, the acquired company can be a way of entering new markets and expanding brand portfolio. Thus, as any other undertaking, takeovers involve risks but they seem to be worth taking. It might be that due to those risks, a company’s management may oppose the idea of their company passing into the hands of rivals, in which case we speak of a hostile takeover. Croatian companies often become takeover targets. Pliva, for instance, inspired a bidding battle which saw the price of its shares increasing as the interested parties were trying to outbid each other.

The question is whether small fish can eat big fish. Agrokor, for example, which has become famous for its strategy of growing through acquisitions, was negotiating a takeover of a Turkish retailer. They say that all a small company needs to do to take over a bigger company is to convince a bank or financial institution that financing their takeover deal will be a profitable operation. Agrokor seemed to have found a suitable partner and it stood a good chance of winning since it was the only remaining bidder in the same line of business, i.e. a strategic buyer.

The other bidders were private equity funds which finance acquisitions through debt (known as leveraged buyouts). The debt is moved to the balance sheet of the acquired company which then has to pay it back. The news reports placed buy-out groups at a disadvantage to trade buyers, which could offer synergies and were likely to be less constrained by Turkish takeover law. Bidders in Turkey could not force minority shareholders to sell via a so-called squeeze-out, making it difficult for private equity to transfer debt on to a listed target company and benefit from the tax shield of interest, an important part of their model. Despite all that some other interests obviously prevailed.