2.

Friendly Takeover
- it is the acquiring of one company with another company with the FULL KNOWLEDGE and
CONSENT of the company’s board of directors that’s being acquired. It also requires the
approval of the shareholders but they often just follow suit to the board of directors’ decision.
Components of a friendly takeover:
1. It is a public offer of cash or stock made by the bidding company, which is to be
approved by the board of directors.
2. The premium per share that the acquiring company will pay is often the key to make the
deal a success.
3. Shareholders with voting rights will now vote for its approval (more than 50% votes).
4. Even though it was already approved by the board, it should still be approved by a
regulatory body.

12. Leverage Buyouts

- commonly referred to as LBO, is used when a company acquire another company using almost
debts. Usually it is 90% debts and 10% equity. They would use the assets of the company they
are acquiring as a collateral for the debts they will borrow. If the plan works accordingly, the
company would have a large return on equity and internal rate of return.

Sources:
https://corporatefinanceinstitute.com/resources/knowledge/deals/friendly-takeover/
https://financial-dictionary.thefreedictionary.com/friendly+takeover
https://corporatefinanceinstitute.com/resources/knowledge/finance/leveraged-buyout-lbo/
https://www.thestreet.com/markets/mergers-and-acquisitions/what-is-leveraged-buyout-
14832477