Answer:
Takeover constraint describes legal constraints that limit the ability of the raiders to acquire a firm.
Takeover constraints are legal measures that are designed to make it more difficult for hostile takeovers to succeed. They can take a variety of forms, such as:
Poison pills: A poison pill is a type of takeover defense that makes it more expensive for a hostile bidder to acquire a company. For example, a company might issue a large number of new shares of stock that are only available to existing shareholders. This would dilute the ownership stake of the hostile bidder and make it more difficult for them to gain control of the company.
Golden parachutes: A golden parachute is a type of contract that provides generous severance packages to top executives in the event of a takeover. This can make it more difficult for a hostile bidder to acquire a company, as they would need to raise enough money to pay out the golden parachutes.
Staggered boards: A staggered board is a type of corporate governance structure in which the terms of directors are staggered so that only a portion of the board is up for election each year. This makes it more difficult for a hostile bidder to gain control of the board of directors and take over the company.
Takeover constraints are designed to protect the interests of shareholders and to ensure that takeovers are conducted in a fair and orderly manner. They can also help to prevent corporate raiders from acquiring companies at fire sale prices.
Step-by-step explanation: