What is Killer Bees Financial Strategy and How to implement it?

To put it another way, in the mergers and acquisitions environment, "killer bees" refer to enterprises or people who help a company in averting a hostile takeover by another company. They are comparable to white knights in that they use a broader variety of takeover defensive tactics, but they are not as effective. When it comes to their hostile takeover defenses, killer bees are known as "killer bees" in part due to the fact that they usually behave extremely aggressively with their aggressive takeover defenses.

Key Points Briefly

  • To effectively fight off a hostile takeover attempt, killer bees are used to assist takeover targets.

  • They are known for using very strong takeover defensive techniques.

  • A killer bee may be either one person (such as an attorney) or a business organization (such as an investment bank)

The Characteristics of Killer Bees Strategy

The exact characteristics of a killer bee may differ significantly. From a private person to an attorney or legal company, accountant, consulting business, or investment bank, a killer bee may take the form of any of these entities or individuals.

The primary function of the strategy is to prevent the hostile takeover and in essence it has two jobs. They want to accomplish one of two things −

  • make the takeover target excessively difficult and/or costly to buy, or

  • make it so unappealing that the prospective acquirer loses interest in pursuing the acquisition in the first place.

What strategies are implemented by companies and managers?

As a result of their evaluation of the particular takeover scenario they are faced with, killer bees use a variety of takeover defensive techniques to prevent them from being captured. Killer bees use whichever takeover resistance they believe will have the greatest chance of success.

Second, assisting the targeted business in incurring the least amount of cost or harm required to fight off the hostile takeover is a primary concern. That secondary reason, on the other hand, comes in a distant second to the main aim of preventing the takeover. The Pac-Man Defense and the People Poison Pill are two killer bee tactics that are widely used.

  • Pac-Man Defensive Strategy

When a target business tries to turn the tables on a prospective acquirer, this is referred to as the "Pac-Man Defense."

The target company uses the same strategy as the aspiring acquirer, buying up shares of its stock in order to gain control over the acquiring company to prevent it from a hostile takeover. This could prevent the acquirer organization that may decide to hold the takeover.

  • People Poison Pill

People Poison Pill − Another extreme method that a killer bee may suggest is the use of poison pills to poison people. This is implemented by the managers in an extreme situation where they advise the management to change the board and the entire key management of the firm to prevent greater damage to the organization.

As the name suggests this is the last and final defense strategy that is implemented by the manager to prevent the hostile takeover. In this method, the key personnel is removed from the organization or their position to make the firm look less valuable. This could be a software developer, writer, programmer etc.