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External Forces Affecting Governance: Financing A Takeover Debt Financing

There are three main methods for financing a company takeover: debt financing where the acquiring company pays a specific amount for the merger, partial or full equity conversion where the target shareholders are offered debt instruments or shares as payment, and a share swap or all-share deal where the transaction is financed entirely by exchanging shares. External forces that can affect corporate governance include competitors in the same industry, financiers who provide funding, regulatory agencies that oversee industries, watchdog groups that monitor corporate conduct, potential acquiring companies, and information providers, gatekeepers, and assessors such as accountants, lawyers, and rating agencies. Shareholders generally have trust in corporate directors and officers to operate the company and chart its future course.

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274 views

External Forces Affecting Governance: Financing A Takeover Debt Financing

There are three main methods for financing a company takeover: debt financing where the acquiring company pays a specific amount for the merger, partial or full equity conversion where the target shareholders are offered debt instruments or shares as payment, and a share swap or all-share deal where the transaction is financed entirely by exchanging shares. External forces that can affect corporate governance include competitors in the same industry, financiers who provide funding, regulatory agencies that oversee industries, watchdog groups that monitor corporate conduct, potential acquiring companies, and information providers, gatekeepers, and assessors such as accountants, lawyers, and rating agencies. Shareholders generally have trust in corporate directors and officers to operate the company and chart its future course.

Uploaded by

Leoson
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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FINANCING A TAKEOVER

Debt Financing
 A company acquiring another pays a specific amount of money for the merger transaction
to complete.
Partial or Full Equity Conversion
 This is done by giving the shareholders of the target company offers that include a debt
instrument in partial or in full payment of shares.
Share Swap/All Share Deal
 In a takeover, sometimes the transaction can entirely be financed by a share swap of all
share deal.

EXTERNAL FORCES AFFECTING GOVERNANCE


COMPETITORS
 Competitors refer to corporations and other business entities, private or public, offering the
same product or services that the company is offering.
FINANCIERS
 Financier is a term given to a person or entity who manages routinely huge amount of
money. This person or entity usually involved in the activity of lending money, project
financing, large-scale investment or large-scale management of money.
REGULATORY AGENCIES
 Regulatory agency, in general, refers to a public authority or government agency
responsible for exercising autonomous authority over some area of corporate activity in a
regulatory or supervisory capacity.
WATCHDOGS
 Watchdog refers to independent organizations trying to police a particular industry or
corporate conduct to make certain that the activities of these companies are accordance
with the acceptable standards and existing laws.
PREDATOR COMPANIES
 Predator companies refer to corporations that are always on the watch and waiting for a
chance to take-over a certain company, be it via friendly or hostile takeover.
INFORMATION ENHANCERS, PROVIDERS AND GATEKEEPERS
 Gatekeepers refer to independent third party persons or entity whose cooperation is
important because they have the capability to at least deter, if not prevent misconducts of
corporations. Examples of gatekeepers are accountants, lawyers, bankers, analysts, rating
agencies and examiners.

TRUST
 Shareholders have more trust than doubts to the agents and they are entrusting everything
as far as operation including the charting of the corporation’s future to its directors and
officers.

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