Anti-takeover provisions

As the prefix “anti” tends to suggest, these anti-takeover provisions are often incorporated into a company’s bylaws and related documents created at the founding of a company to discourage takeovers.

Obviously no company wants to get taken over without warning, but it does happen. Hostile takeovers are not just a myth from the movies. They’re an actual problem that you need to guard your company against.

There are some different ways to prevent takeovers, and some of them even have funny names. One is called, we kid you not, the Pac-Man defense, and this means that when a takeover bid comes into the picture, a retaliation bid must be made in response. Similarly humorous is the macaroni defenses, which means that a bunch of expensive bonds have to be purchased before a company can take over another The Pac-Man defense gives the potential buyer something to respond to while the macaroni defense is an attempt to make a company too pricey to buy in the first place.

Other things like fair price amendments can be baked into the bylaws of the company as well, which is exactly what it sounds like. It’s basically a way to say “sure you can buy us but you’re going to have to pay what we think we’re worth”.

 

Example:

Hopefully these anti-takeover provisions we’re putting in place for our new company will apply not only to hostile business takeovers but hostile alien takeovers as well.

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