How to Acquire a Public Company
There are two ways to purchase a public company, by friendly acquisition or hostile takeover. The former is accomplished with the help of management and the current board of directors, the latter is not. In terms of funding this means with a friendly acquisition the company has agreed to a certain price to acquire the company; this is usually more than the current stock price. Either way, both deals require the acquirer to purchase a 51 percent stake in the company's ownership. There are some primary steps involved in acquiring these shares.
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Instructions
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Obtain the most recent annual report published by the company. Most companies provide this as a download on the company website. You can also call investor relations to request that an annual report be sent to you.
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Turn to the balance sheet in the annual report. This statement provides an overview of the company's stock position, including the number of shares in the hands of shareholders, also known as shares outstanding. This can be found in the section titled, "Stockholders' Equity."
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Calculate the number of shares you need to own in order to acquire the company. It takes 51 percent ownership in order to acquire a company. Let's say the number of shares outstanding is 100,000. Multiply the number of stock outstanding by .51 in order to calculate the number of shares you need to purchase. For instance, .51 multiplied by 100,000 equals 51,000.
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Calculate the amount of capital you will need to acquire the company by multiplying the number of shares you need by the current stock price. Let's say the current stock price is $10. The calculation is $10 multiplied by 51,000 or $510,000.
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Obtain capital. You can use your own funds or secure a loan from a bank based on the acquiring company's cash assets. Bank's use the acquiring company's cash as collateral to help fund a corporate takeover. This is also known as a leveraged buyout which is commonly used in the case of a hostile takeover.
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Purchase shares. Contact your broker or investment bank representative. Tell him how many shares you would like to purchase and at what price. He will also want to know how long you want to keep the order to purchase shares. For instance, in this case you can tell them that you want to purchase 51,000 shares at $10 a share with an order good for 30 days or until filled.
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Tips & Warnings
Sometimes a friendly takeover can turn hostile and vice versa.
