The Essential CFO: A Corporate Finance Playbook

Chapter Eleven

Responding to Takeover Offers

WITHOUT QUESTION, responding to a potential takeover offer can be a significant test of the CFO's leadership skills and analytical capabilities. The criticality of this responsibility applies to CFOs of both private and public companies, although they will be much more subject to legal considerations and constraints in a public company context.

Indeed, it has become axiomatic for public company CFOs—along with CEOs and boards of directors—to profess their commitment to maximizing shareholder value, including being open to the possibility of a third-party purchase of the company. This does not mean that companies must solicit an offer or to respond favorably if an offer is received, but in the modern corporate finance environment, it does mean that they must give careful consideration to any bona fide offer, including an objective evaluation of its merits.

GOVERNANCE POLICIES

CFOs should be well aware of their companies' governance policies, which have become increasingly important considerations among investors. While takeover defenses in the past were often viewed positively as protections against a corporate raider or as vehicles for negotiating a better price, they now are viewed more critically by many investors and the shareholder advisory services (such as Institutional Stockholder Services and Glass Lewis).

For example, many investors advocate that a company's governance policies should include:

• Independent Chairman: Separate ...