Target Firm


DEFINITION of 'Target Firm'

A company which is the subject of a merger or acquisition attempt. A takeover attempt can take on many different flavors, depending on the attitude of the target firm toward the acquirer. If management and shareholders are in favor of the transaction, then a friendly and orderly transaction can take place. When there is opposition to the transaction, the target firm may attempt a variety of hostile actions hoping to thwart the takeover attempt.


Target firms are often acquired at a price in excess of their fair market value. This is rational when the acquiring firm perceives an additional strategic value to the acquisition, such as greater economies of scale. These economies do not always materialize however, since there can be additional hidden costs associated with the integration of two firms.

  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Continuity Of Interest Doctrine ...

    A doctrine which stipulates that a corporate acquisition can ...
  3. Yellow Knight

    A company that was once making a takeover attempt but ends up ...
  4. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
  5. White Knight

    A white knight is an individual or company that acquires a corporation ...
  6. Hostile Takeover

    The acquisition of one company (called the target company) by ...
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