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Understanding friendly acquisitions and mergers

In some business situations, one company unilaterally takes over another through a sale or merger. These types of events happen with some frequency right here in New Jersey as ownership of partnerships, corporations and other entities changes hands and control. However, every merger is different and one major factor that can play into how the merger occurs is whether the business transaction is friendly or hostile.

In a friendly merger or takeover there is little business-related animosity. The parties, being the buying or controlling party and the selling or absorbed party, agree to the terms and conditions of transferring the absorbed party into the fold of the buying party. Even if a selling party does not like that the merger is happening, the merger is considered friendly if there is agreement about how the transaction will occur.

A hostile merger or takeover is somewhat different. As the name implies, the takeover goes against the desires of one party's controlling board. The buying party is viewed as hostile and aggressive, taking control of another entity that does not want the affiliation. In a hostile merger there is generally not agreement about how or even if the transaction should occur.

Buying a company or selling a company can be stressful even when the transaction is friendly. It can make things easier for both sides of the sale when the parties can at least acknowledge each other's needs and wants in the process. This, however, is not always the case. Whether a business seeks to buy another or is threatened with being bought by a competitor, help may be available. Attorneys who work in the business transactions field can offer their clients assistance that meets their specific needs with regard to their mergers.

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