What is a Friendly Takeover?

A friendly takeover is the opposite of a hostile takeover. A friendly takeover occurs when the offer by the bidder is accepted by the board of directors of the target company and recommended to their shareholders. The board would usually accept an offer from the bidder if the offer is beneficial to and serves the interest of the target company's shareholders.

An acquiring company who wants to bid or takeover another company typically approaches the target company's board to present them with their offer or takeover bid. The board members can accept or reject the offer after consideration. If the board accepts the offer then they can proceed with the friendly takeover and share information such as the company's financial books. The acquiring company is not at risk since they will be aware of the target company's financial position during the transaction.