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Hi sir, could you please explain takeover bids and also this statement:
“Increasing equity finance may increase the risk of a company shares being bought by a potentional acquirer, leading to a future takeover bid”
A takeover bid is where one company makes and offer to buy all of the shares of another company.
The shareholders of the company being taken over the site on whether they want to accept the offer (which obviously depends on how much they are being offered per share).
If a company issues more shares and a lot of them are bought by the company thinking of trying to take over the company, then it gives them more chance of winning the vote 🙂