What Is a Shark Watcher?

A shark watcher is a professional or firm that specializes in the early detection of hostile takeovers. Shark watchers are hired by firms that are concerned about the possibility of being targeted by larger corporations. They monitor aspects of a firm's trading activity on the market that could indicate a possible takeoꦆver, such as who is accumulating shares and the number of shares acquired.

How Shark Watchers Work

Large 澳洲幸运5开奖号码历史查询:corporations often look at smaller companies and startups as easy takeover targets. The 澳洲幸运5开奖号码历史查询:target firm may have a ℱproduct or service worth acquiring, offer a wa💞y to break into a new market, or be a competitor that is stealing market share.

When a company doesn't want to be taken over, the potential acquirer may decide to pursue a hostile takeover. This generally involves building an influential stake in the target, stirring unrest among company 澳洲幸运5开奖号码历史查询:shareholders, potentially raising su💝pport to oust members of the board that oppose doing a deal, and basically doing whatever it takes to get the takeover apprꦿoved.

Companies may have experienced problems with their 澳洲幸运5开奖号码历史查询:share prices as a result of issues with management, finances, or business. Potential targets have to be vigilant to prevent themselves from being taken over. One way to do so is by hiring what the financial industry calls a shark watcher. The term is analogous to a large shark swimming around a bod🐼y of water in search of smaller fish to swallow up.

A shark watcher is a professional or company that monitors trading patterns in their client's stock and attempts to determine who is accumulating shares. That's because companies often initiate hostile takeover attempts by acquiring stock so that they can control a significant part of voting rights or a majority of voting rights. The shark watcher's primary business is usually the solicitation of proxies for client corporations.

Hostile Takeover Defense Strategies

Shark watchers are key players in mergers and acquisitions (M&A). But rather than facilitate them, shark watchers help prevent them from occurring, especially when ꦇthe target company has no desire to 🔜be taken over.

So what happens when companies think they are targets? These businesses have a few options available to them when they believe another company may wish to take them over. There are a number of lines of defense that a target can use to dissuade hostile parties who may show an interest in the potential target firm. They range from poison pills to golden handshakes.

The 澳洲幸运5开奖号码历史查询:poison pill defense, for example, aims to dilute the shark's ownership of the target, whereas the 澳洲幸运5开奖号码历史查询:golden handshake involves arranging large severance packages for a company's key personnel. D✃efenses commonly involve makin🐭g the cost of a takeover far too high or making the target company worse off from either a financial or strategic standpoint. The goal is to lead the so-called shark to believe that acquiring it becomes a less attractive business move.

Example of a Shark Watcher

Here's a hypothetical example to show how shark watchers work. Let's say Sesame Brokerage is a publicly traded company that has a lot of valuable assets. The company's stock price has recently been depressed due to macro trends sweeping the industry. The company's management, shareholders, and 澳洲幸运5开奖号码历史查询:board of directors are all concerned about being a tak꧑eover target.

Sesame Brokerage hires Bert and Ernie's Shark Watchers Inc. to monitor the trading activity of Sesame Brokerage's shares on the 澳洲幸运5开奖号码历史查询:open market. The firm will track companies that acquire shares of Sesame Brokerage and alert Sesame's management team to ♛any possible takeover threats.

At this point, Sesame Brokerage coul🌌d be made aware by it♑s shark watcher that Monster ABC has been buying up significant amounts of its shares, possibly seeking to acquire a majority holding. Monster ABC is known for acquiring depressed companies. Sesame Brokerage can then prepare itself to fight off the takeover by implementing a variety of defenses before the acquisition is attempted.

The Bottom Line

Being taken over isn’t a desirable outcome for everyone. Some companies don’t want this to happen and worry that a bigger fish could aggressively pounce with an offer that shareholders like and gobble it up. That fear has created a market for shark watchers. These firms help companies to spot if a predator is lurking. They keep tabs on who is buying notable sta🅠kes, etc., and alert their clients about any suspicious movement so that they can find an adequate defense b🅰efore it’s potentially too late.