Mergers &Acquisitions:Potential Takeover Target

Append below are some points to take note of for a potential investor who would like to ascertain whether a certain company could likely to be a target for a takeover:

• Is this listed company having a small paid-up capital? By taking over this small paid-up capital listed company,the purchaser can then inject his new assets into the company to expand it,
• Is the Price-Earning ratio relatively low compared to its competitors? This might attracts its competitors or other companies as they would like to reduce its own price-earning ratio. ( Please refer to my article on Price-earning ratio )
• Is the potential candidate having no or negligible amount of borrowing? This might attracts those companies that are very highly geared and wish to reduce its gearing upon the takeover of its candidates
• Is there a company or a group of related companies already having a substantial holding in it? Some companies hold strategic stakes in other companies to protect them from being taken over. This could be for business or historical reasons. Nevertheless,this strategic shareholding usually does effectively stop any takeover bids.
• Are the company’s assets being undervalued,the value are significantly lower than its share price? In this type of scenario,the existing shareholders might be able to be persuaded to sell off their shares for a price higher than its current market price so as to get capital gains.
• Is the company controlled by an ageing chief executive or elderly shareholders? He or she might be easier to be persuaded to sell the stakes to another company.

• Pitfalls And Key Areas To Focus in Mergers &Acquisitions
• M&A:What is the difference between a merger and a takeover?
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• Japanese banker Caught In Dilemma Over Proposed Takeover Of Hokuetsu By Oji Paper
• HCA Takeover Bid A US Record Of US$32.7 Billion (Including debts)
• What is the potential Issue(s)/challenge(s) in Joint Venture Partnerships
• To Diversify Or Not To Diversify