What is finance, what is a poisonous pill?
Poison Pill is a financial strategy that is sometimes used to allow businesses from preventing undesirable events. In most cases, this approach is implemented as a means of discouraging enemy takeover by being less attractive and therefore not standing in the time of corporate robbers; Or increase the amount of resources needed to obtain a company to a level Raider considers unacceptable. There are several ways to create this effect of a poisonous pill and still not freeze the company permanently.
by one approach to creating a poison pill is to increase the number of shares available for purchase. Along with the issue of shares, shareholders can buy shares at the market prices below. This creates a situation where Raider must be willing to pay the current market prices for these new shares, provided that any of the shareholders is willing to sell them. Depending on the number of shares issued, this may make an attempt to take over less attractive because the potential return withLower.
Another way to produce the situation of a poisonous pill is to create what is known as the Plan of Ownership of Employees or ESOP. With this plan, all current shares that are not under Raider control are transformed into another stock class and are issued to employees. Plans of this type often require the buyer to purchase these shares from employees in the current market value or predetermined minimum prices per share, depending on what is higher. Determining the minimum number at a level that is likely to be above the borders of what Raider is willing to invest in an enemy takeover will easily end the attempt.
It is even possible to create a poison pill that includes the current clientele of the company under Siege. By creating a work agreement that ensures that customers receive a significant amount of compensation in the event of receipt is on RaiderAzena's financial burden that is likely to end an attempt to take over. The conditions of this Agreement are normally structured in a way that protects the client from and the small possibility that any entity that takes over the company will stop product lines or make any other changes that would negatively affect the business relationship.
When creating a poison pill, it is important to find a perfect balance between what just deter enemy takeover, but it is not enough to create serious financial problems for society. For example, if shares are issued to employees as part of a pattern facility, the company must be able to buy these shares back without paralyzing the operation for a long time. The same applies to the issuance of new shares and the sale under market value to existing shareholders; The company wants to maintain its market share, honor all shareholders' obligations and still stand up to see all the shares of the increase in market value. For this reason it requires to createThe poisonous pill of careful planning and design, or society will face difficulties that are much worse than any hostile takeover can create.