The financial characteristics that make firm
vulenerable.
Low or negative earnings, making stock prices less and shares
can be easily bought by the firm taking over. However is is less
possible as other firm do not target firms with low earnings until
and unless they beleive that they can turn them around.
The firms with high growth rate and small market value with
high potential are mostly the target. They have a good producta nd
high expected rate of return
The firms which are in industries that have undergone
deregulation. This will lead to more flexibility na dmay translate
in higher earnings, so large firms may take over these firms.
Liquid firms with stable cash flows
Firms that have low P/E ratio and positive earnings will make
for value investment for the acquirer