Description
What is Reverse Takeover!
Reverse Takeover
A Back Door To Market Group: v
Introduction
• Reverse takeover is a term in the market where a company takeover another company’s market shares. Here in simply happens a plan to get the whole access to which existing company makes them a targeted company. They take over all the management authorities, shares percentages, IPO Market’s Reputation including the firm either it has goodwill or not.
Takeover
• Series of transacting whereby a company acquires control over the assets of a company, either directly by becoming owner of those assets or indirectly by obtaining control of management of the company. • Here in simply an up growing company who wants to target a competition or any other business through which he can get any more valuation to its existing company takes decision to take over the every worth of targeted company.
Why Prepare?
Preparation is essential for many companies in order to remove obstacles to the takeover. • Their motivations: It may always depend upon the personal motive of the company, for what purpose he wants to target a company to take over. • Their asset situation: A company could try to do a takeover plan if such company really wants some assets in lower price as compared to purchasing new one. It gets ready place. • Their financial constraints:
If a company suffering from the problem of financing constraints so there company could take a decision of creating a takeover plans by targeting its low level competitors or anyone else also. • Their personal projects after the takeover: A company can also think about the valuation a product in market, if company think that any competitor of his not doing that much name in the market then that company can be taken over by others.
Advantages
• The bank and financial institute allows some percentages of rebate and discounts to the company in case of Reverse Takeover happen. By which new comers may get some benefit as compared to paying all the financial values to the banking sectors. • The financial help could be increase with getting help of already taken over company. In goodwill of the company, in the shares of the company.
Disadvantages
• The name of the EX company may affect the new strategies coming through new owner. It either be
better or may be negative for the company who taken over the market. • The shareholders of the existing company will lose their confidence in the investment part of the company. Because they will sure have some points of the future investment on that company also.
After The Takeover
Once the sale has happened and the price has been paid by the buyer, things are still not finished in the majority of cases like,
•
The transition period:
it is the time during which something
changes from one state or stage to another
• Monitoring of guarantees: to meet the given assurance • Monitoring of the clause with price supplement
Advice for a successful takeover
Before taking step ahead for takeover to a targeted company there are certain advices to which we have to follow them it would be helpful to us for a successful takeover.
N° 1: Prepare the project
Before moving to the operational phase, it is essential to look at the motivations for and objectives of the operation. There can be many motivations and any opacity could deter buyers from seeing your file. Furthermore, an asset and liability or even personal diagnosis is also an
essential part of the process in order to prepare for its consequences.
N° 2: Never takeover a business on your own
Taking over a company needs professional advice (from financiers, tax specialists, lawyers and technicians) right from the preparatory phase. Do not rely on the seller’s advisor to help you. They are not there to do that and only represent their clients' interests. There could be conflicts of interest and it would incur their professional liability. It is preferable to stick with buyers’ clubs or get help from a buyer advice firm for both the auditing and negotiation phases. A buyer advice firm is an excellent solution to give your part of the deal credibility in the seller's and particularly their advisors’ eyes.
N° 3: Precisely define your target
The lack of precise identification of your target inevitably leads to failure. Do not think that raising the spectre of targeting, will increase the chances of success. Quite the contrary! Mergers and acquisitions firms appreciate buyers having a precise target, which they maintain. Conversely, if you only research one company in the region, which has a return of more than 10%, you increase the risk of failure.
N° 4: The seller chooses the buyer
Many takeovers fail due to a lack of comprehension of the seller's psychology. They have often spent many years setting up and developing a business, which feeds their family and those of many other employees. They are not selling a building, but rather a part of themselves. The relational and emotional aspect of the negotiation often seems like a decisive element. The buyer must therefore ‘seduce’ the potential seller. Cases where sellers have decided to sell for a price, which is less than
they had originally decided, are not rare when the buyer creates a confident climate, which reassures the seller that their company will last.
N° 5: Act as a risk manager
Taking over a business is similar to risk management. Firstly, you have to identify the risks of the takeover, in particular, financial plans (durability...), strategic plans (is the business on a growing market?), tax plans (does the business have well written commercial contracts?), environmental plans (does the company respect anti-pollution rules?) and social plans (is the atmosphere good?). Once these risks have been identified, you must then evaluate and organize them from the weakest to the most important in terms of number of claims. In fine, it is necessary for you to handle these risks by getting insurance, guarantees or transferring.
N° 6: Have a financial approach with regards to tax and legal impact
You must engage the seller in the sales process. In order to do this, it is recommended for each of the parties’to declare their intentions in an attached letter of intent. A tight commitment will allow you to limit discussions and future disagreements, in particular by setting very specific precedent or subsequent conditions as well as eventual damages, which result from this. Liabilities and asset warranties must be carefully written by a specialist. It is necessary to negotiate the sellers’ commitments, in particular, their resignation of the board of directors, their eventual help and a non- competition clause for the future.
N° 7: Be aware of legalities
Be careful before writing a letter of intent, before
asking for exclusivity, before signing a promise, a sales contract or liability warranty... Try to involve the seller and their advisors right from the letter of intent. Do not hesitate to give your letter of intent to the seller’s advisor before telling their client. Ideally, mention the letter of intent to the seller’s advisor during one or several meetings. You will seriously increase your chances of your letter of intent being accepted because the seller’s advisor knows their client’s negotiation margin.
N° 8: The price is not the most important thing
Do not focus solely on the price of taking over the target business. Try to have a global approach to the company’s value by looking to the future. The company's future potential is much more important than the price that you will pay on signing. It is often only 2 or 3 years later that you will realise if you have paid too much for a company. Including the seller in the takeover process is an important guarantee for success for the buyer. Do not forget that the time that they spend with you during the accompaniment stage is sometimes worth more than the price you will pay.
N° 9: Without financing, there is no takeover
Like with any other project for setting up or developing a company, financial partners will research a project, whose risk is in line with the rate of expected return (RER). In order to convince them, whatever the arrangement, the essential element is in their capacity to succeed with the transfer and subsequent development. The buyer’s commercial, technical and financial credibility will be the determining factors. The buyer’s experience and confidence will matter to a business team... Finally, the quality of the strategic, operational and financial business plans must be perfect.
N° 10: After the takeover, you must adapt
Be aware that your status changes after taking over a business. You are no longer an employee or a manager but have taken on the role of a director of a company, which you do not know. Be humble and never criticise the past management. At this stage, get lots of advice. This will be your first good move as head of the company.
Case Studies
Modi Cement Limited – Gujrat Ambuja Cement Limited.
• Modi cement limited company was just growing company and take the 42% of the cement market in gujrat and balanced was held by other competitors. Recently when narendra modi comes in the political conditions their own business of modi cement limited comes in a black shadow. There were so many competitor existed to ready for their own strategies to breakdown the popularity of the modi cement limited Then ambuja cement limited comes in the eastern market of the modi cements limited company where they make a strategies based on the getting loopholes in the SPO (seasonal public offer) where a huge amount were invested by the ambuja. But that time modi were not alerted and he was also busy in the political views. So here ambuja get some insured employees of the modi cement limited and taken over the whole share of the modi cement limited. And named that new market as gujrat ambuja cement limited.
•
•
•
Ted Turner - Turner Broadcasting
After inheriting his father's small billboard company, Ted Turner found himself facing the hard facts of business. His dad's operation was in rough financial shape. Turner had a bold vision for the future. He became fixed on building a media empire based on new satellite technology and the
expansion of television markets with the opening of the UHF broadcasting bands. In 1970, with a little investment cash, Turner acquired the once publicly traded Rice Broadcasting (WJRJ-TV) in Atlanta. Merging his billboard company into Rice Broadcasting adding value to the company's stock. Turner was now in a position to tap the capital markets of Wall Street. He created TBS, the first national UHF superstation, CNN, and The Cartoon Network. Latter he purchased the MGM/UA film library and launched Turner Film Classics. Never one to sit still, Turner acquired a national baseball franchise which he moved to Atlanta. After an unsuccessful attempt to purchase the long established CBS-TV network Turner Broadcasting was itself acquired by the Time/Warner corporation. Today, his is personal worth over five billion dollars.
J. Michaels Inc - Muriel Siebert & Co.
In the early '60's a college drop-out left Cleveland, Ohio and moved to New York City determined to find a career. She was interested in business and the stock market in particular. The problem was, women had very limited roles they could play in Wall Street finance. Muriel Siebert knew the importance and value of information in the Wall Street game of high finance. She became a top industry analyst, specializing in the aviation and entertainment markets. When she began getting calls from major institutional buyers who wanted to place orders she knew it was time to get her own brokers license. In 1967 Seibert made history by becoming the first woman to purchase a seat on the New York Stock Exchange. She founded her own brokerage, Muriel Siebert & Co. in 1970. Between 1977 and 1987 she served as the New York State Superintendent of Banks. By February of 1996, Wall Street's top woman executive, could see where brokerage services were headed. To fund the move to discount brokerage services and internet trading Siebert took her brokerage firm public. Utilizing a reverse merger with J. Michaels Inc., a defunct, but publicly traded Brooklyn furniture company, the firm of Muriel Siebert & Co., Inc. (SIEB) was created. By 1999, Siebert's company was rated the number one discount brokerage by Money Magazine (June '99). Her company's stock reached a 52 week high of over $70 per share.
Group Members
Roll No 29 30 31 32 33 34 35
Name Atul Pandey Neha Pandey Nikhil Pandey Pramood Pandey Priyanka Pandey Yashwant Pandey Balmukund Pathak
doc_833619906.docx
What is Reverse Takeover!
Reverse Takeover
A Back Door To Market Group: v
Introduction
• Reverse takeover is a term in the market where a company takeover another company’s market shares. Here in simply happens a plan to get the whole access to which existing company makes them a targeted company. They take over all the management authorities, shares percentages, IPO Market’s Reputation including the firm either it has goodwill or not.
Takeover
• Series of transacting whereby a company acquires control over the assets of a company, either directly by becoming owner of those assets or indirectly by obtaining control of management of the company. • Here in simply an up growing company who wants to target a competition or any other business through which he can get any more valuation to its existing company takes decision to take over the every worth of targeted company.
Why Prepare?
Preparation is essential for many companies in order to remove obstacles to the takeover. • Their motivations: It may always depend upon the personal motive of the company, for what purpose he wants to target a company to take over. • Their asset situation: A company could try to do a takeover plan if such company really wants some assets in lower price as compared to purchasing new one. It gets ready place. • Their financial constraints:
If a company suffering from the problem of financing constraints so there company could take a decision of creating a takeover plans by targeting its low level competitors or anyone else also. • Their personal projects after the takeover: A company can also think about the valuation a product in market, if company think that any competitor of his not doing that much name in the market then that company can be taken over by others.
Advantages
• The bank and financial institute allows some percentages of rebate and discounts to the company in case of Reverse Takeover happen. By which new comers may get some benefit as compared to paying all the financial values to the banking sectors. • The financial help could be increase with getting help of already taken over company. In goodwill of the company, in the shares of the company.
Disadvantages
• The name of the EX company may affect the new strategies coming through new owner. It either be
better or may be negative for the company who taken over the market. • The shareholders of the existing company will lose their confidence in the investment part of the company. Because they will sure have some points of the future investment on that company also.
After The Takeover
Once the sale has happened and the price has been paid by the buyer, things are still not finished in the majority of cases like,
•
The transition period:
it is the time during which something
changes from one state or stage to another
• Monitoring of guarantees: to meet the given assurance • Monitoring of the clause with price supplement
Advice for a successful takeover
Before taking step ahead for takeover to a targeted company there are certain advices to which we have to follow them it would be helpful to us for a successful takeover.
N° 1: Prepare the project
Before moving to the operational phase, it is essential to look at the motivations for and objectives of the operation. There can be many motivations and any opacity could deter buyers from seeing your file. Furthermore, an asset and liability or even personal diagnosis is also an
essential part of the process in order to prepare for its consequences.
N° 2: Never takeover a business on your own
Taking over a company needs professional advice (from financiers, tax specialists, lawyers and technicians) right from the preparatory phase. Do not rely on the seller’s advisor to help you. They are not there to do that and only represent their clients' interests. There could be conflicts of interest and it would incur their professional liability. It is preferable to stick with buyers’ clubs or get help from a buyer advice firm for both the auditing and negotiation phases. A buyer advice firm is an excellent solution to give your part of the deal credibility in the seller's and particularly their advisors’ eyes.
N° 3: Precisely define your target
The lack of precise identification of your target inevitably leads to failure. Do not think that raising the spectre of targeting, will increase the chances of success. Quite the contrary! Mergers and acquisitions firms appreciate buyers having a precise target, which they maintain. Conversely, if you only research one company in the region, which has a return of more than 10%, you increase the risk of failure.
N° 4: The seller chooses the buyer
Many takeovers fail due to a lack of comprehension of the seller's psychology. They have often spent many years setting up and developing a business, which feeds their family and those of many other employees. They are not selling a building, but rather a part of themselves. The relational and emotional aspect of the negotiation often seems like a decisive element. The buyer must therefore ‘seduce’ the potential seller. Cases where sellers have decided to sell for a price, which is less than
they had originally decided, are not rare when the buyer creates a confident climate, which reassures the seller that their company will last.
N° 5: Act as a risk manager
Taking over a business is similar to risk management. Firstly, you have to identify the risks of the takeover, in particular, financial plans (durability...), strategic plans (is the business on a growing market?), tax plans (does the business have well written commercial contracts?), environmental plans (does the company respect anti-pollution rules?) and social plans (is the atmosphere good?). Once these risks have been identified, you must then evaluate and organize them from the weakest to the most important in terms of number of claims. In fine, it is necessary for you to handle these risks by getting insurance, guarantees or transferring.
N° 6: Have a financial approach with regards to tax and legal impact
You must engage the seller in the sales process. In order to do this, it is recommended for each of the parties’to declare their intentions in an attached letter of intent. A tight commitment will allow you to limit discussions and future disagreements, in particular by setting very specific precedent or subsequent conditions as well as eventual damages, which result from this. Liabilities and asset warranties must be carefully written by a specialist. It is necessary to negotiate the sellers’ commitments, in particular, their resignation of the board of directors, their eventual help and a non- competition clause for the future.
N° 7: Be aware of legalities
Be careful before writing a letter of intent, before
asking for exclusivity, before signing a promise, a sales contract or liability warranty... Try to involve the seller and their advisors right from the letter of intent. Do not hesitate to give your letter of intent to the seller’s advisor before telling their client. Ideally, mention the letter of intent to the seller’s advisor during one or several meetings. You will seriously increase your chances of your letter of intent being accepted because the seller’s advisor knows their client’s negotiation margin.
N° 8: The price is not the most important thing
Do not focus solely on the price of taking over the target business. Try to have a global approach to the company’s value by looking to the future. The company's future potential is much more important than the price that you will pay on signing. It is often only 2 or 3 years later that you will realise if you have paid too much for a company. Including the seller in the takeover process is an important guarantee for success for the buyer. Do not forget that the time that they spend with you during the accompaniment stage is sometimes worth more than the price you will pay.
N° 9: Without financing, there is no takeover
Like with any other project for setting up or developing a company, financial partners will research a project, whose risk is in line with the rate of expected return (RER). In order to convince them, whatever the arrangement, the essential element is in their capacity to succeed with the transfer and subsequent development. The buyer’s commercial, technical and financial credibility will be the determining factors. The buyer’s experience and confidence will matter to a business team... Finally, the quality of the strategic, operational and financial business plans must be perfect.
N° 10: After the takeover, you must adapt
Be aware that your status changes after taking over a business. You are no longer an employee or a manager but have taken on the role of a director of a company, which you do not know. Be humble and never criticise the past management. At this stage, get lots of advice. This will be your first good move as head of the company.
Case Studies
Modi Cement Limited – Gujrat Ambuja Cement Limited.
• Modi cement limited company was just growing company and take the 42% of the cement market in gujrat and balanced was held by other competitors. Recently when narendra modi comes in the political conditions their own business of modi cement limited comes in a black shadow. There were so many competitor existed to ready for their own strategies to breakdown the popularity of the modi cement limited Then ambuja cement limited comes in the eastern market of the modi cements limited company where they make a strategies based on the getting loopholes in the SPO (seasonal public offer) where a huge amount were invested by the ambuja. But that time modi were not alerted and he was also busy in the political views. So here ambuja get some insured employees of the modi cement limited and taken over the whole share of the modi cement limited. And named that new market as gujrat ambuja cement limited.
•
•
•
Ted Turner - Turner Broadcasting
After inheriting his father's small billboard company, Ted Turner found himself facing the hard facts of business. His dad's operation was in rough financial shape. Turner had a bold vision for the future. He became fixed on building a media empire based on new satellite technology and the
expansion of television markets with the opening of the UHF broadcasting bands. In 1970, with a little investment cash, Turner acquired the once publicly traded Rice Broadcasting (WJRJ-TV) in Atlanta. Merging his billboard company into Rice Broadcasting adding value to the company's stock. Turner was now in a position to tap the capital markets of Wall Street. He created TBS, the first national UHF superstation, CNN, and The Cartoon Network. Latter he purchased the MGM/UA film library and launched Turner Film Classics. Never one to sit still, Turner acquired a national baseball franchise which he moved to Atlanta. After an unsuccessful attempt to purchase the long established CBS-TV network Turner Broadcasting was itself acquired by the Time/Warner corporation. Today, his is personal worth over five billion dollars.
J. Michaels Inc - Muriel Siebert & Co.
In the early '60's a college drop-out left Cleveland, Ohio and moved to New York City determined to find a career. She was interested in business and the stock market in particular. The problem was, women had very limited roles they could play in Wall Street finance. Muriel Siebert knew the importance and value of information in the Wall Street game of high finance. She became a top industry analyst, specializing in the aviation and entertainment markets. When she began getting calls from major institutional buyers who wanted to place orders she knew it was time to get her own brokers license. In 1967 Seibert made history by becoming the first woman to purchase a seat on the New York Stock Exchange. She founded her own brokerage, Muriel Siebert & Co. in 1970. Between 1977 and 1987 she served as the New York State Superintendent of Banks. By February of 1996, Wall Street's top woman executive, could see where brokerage services were headed. To fund the move to discount brokerage services and internet trading Siebert took her brokerage firm public. Utilizing a reverse merger with J. Michaels Inc., a defunct, but publicly traded Brooklyn furniture company, the firm of Muriel Siebert & Co., Inc. (SIEB) was created. By 1999, Siebert's company was rated the number one discount brokerage by Money Magazine (June '99). Her company's stock reached a 52 week high of over $70 per share.
Group Members
Roll No 29 30 31 32 33 34 35
Name Atul Pandey Neha Pandey Nikhil Pandey Pramood Pandey Priyanka Pandey Yashwant Pandey Balmukund Pathak
doc_833619906.docx