And the kindly, loving private equity gal says, "Wanna get taken over?" And then the even more kindly, loving company target person says, "Ummmmm...no."
That's the anti-hostile-takeover "just say no" defense, and it is a reflection of that other kindly, loving lady, Nancy Reagan, best-dressed White House #2 in history. (Her advice to angry teens with low self-esteem when they were pressured to take drugs was to, um...just say no. Luckily, that worked and drugs are no longer a problem in America.*)
In reality, most investors don't want to have to go hostile when taking over a company—not because they are...nice. But because being hostile usually costs more money, creates employee friction with disparate loyalties, and ends up being a drag on investment returns. So just saying "no" often scares off suitors and the conversation is over quickly.
*Denotes sarcasm.
Related or Semi-related Video
Finance: What is a Pac Man Defense?21 Views
Finance a la shmoop what is a pacman defense?
[Pacman eating] yeah well wacka wacka to you too...Hostile takeovers are rare in real life not so
rare in pac-man but when they do happen there exists a whole cadre of strategies
behind defending them at least from the company's perspective being taken over
there and pac-man defense is inarguably the best named strategy of all of
them in essence what happens when we'll say an angry competitor let's call him
blinky Inc tries to buy an angrier competitor let's call them inky inc.
well blinky would be buying shares of inky in the open marketplace filing to [Blinky and inky appear]
go past 15% ownership and eventually own enough shares to elect its own Board of
Directors and make a takeover happen well in a Pac Man defense as blinky is
snarfing up shares of inky, inky buys shares of blinky sort of turning the
tables you know like this and while you're gobbling up that competition and [Pacman gobbling competition]
don't forget to eat a bunch of cherries or a strawberry every once in a while
because you know you still need your fruits and veggies
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