Final answer:
To prevent a takeover, companies can implement strategies such as poison pill defense, strategic alliances or mergers, staggered boards, and golden parachute provisions.
Step-by-step explanation:
To prevent a takeover, companies can implement several strategies. One strategy is to adopt a poison pill defense, which involves issuing new shares to existing shareholders in the event of a hostile takeover attempt. This dilutes the ownership of the acquiring company and makes the takeover more expensive. Another strategy is to enter into a strategic alliance or merger with a stronger company, creating a larger entity that is less vulnerable to takeover.
Companies can also employ defensive tactics such as implementing staggered boards, which means that only a portion of the company's directors are up for election each year, making it more difficult for an acquiring company to gain control of the board. Additionally, companies could establish a golden parachute provision for top executives, ensuring lucrative compensation packages in the event of a takeover, discouraging potential acquirers from proceeding.
Overall, the key to preventing a takeover is for the target company to create barriers that make it difficult and costly for an acquiring company to gain control.