How to buy a company in Maryland

A business is generally acquired in a friendly acquisition or in a hostile takeover. A friendly acquisition involves a buyer negotiating with a seller to be bought for an agreed price. In some cases, the buyer will purchase assets to take control of the company without the need for shareholder approval. However, an acquiring company may buy the acquired company’s stock to complete the transaction.

In a hostile takeover, the acquiring company purchases the majority of the acquired company’s stock. This makes the acquiring company the majority shareholder and gives it control of purchased company’s board. Having control of the board gives the acquiring company effective control of the company regardless of what other shareholders or owners may feel about it. At least 30 days prior to the takeover occurring, a notice must be filed with the SEC.

To entice shareholders to sell, the acquiring company will generally offer more than the current value of each share. Companies that do not want to be part of a hostile takeover may defend against the takeover by taking actions that may lower its value. It may also be possible to buy back the shares so that they cannot be sold. Finally, an anti-trust lawsuit may be filed in an effort to stop an acquiring company from completing the takeover.

Owners of a small business that may become takeover or acquisition targets may wish to talk to a business law attorney. An attorney may be able to help the company take steps to block a hostile takeover. It may also be able to help a company take steps to get maximum value in exchange for selling assets or stock in the company. Legal counsel may be helpful in overcoming potential regulatory hurdles when completing the transaction.

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