Ethical Issues in Mergers and Acquisitions

Acquisitions and mergers have been receiving bad press for decades. The media portrays images of greedy predators seeking weak or unfortunate companies to target for hostile acquisitions. If press accounts were believed, one might easily arrive at the conclusion that such activities are harmful to the economy and to the employees of the target, as well as to the local com-munities where the targeted company is located. Yet some studies (Jensen, 1988) have concluded that most acquisitions and mergers actually benefit the economy, thus meeting the utilitarian ethics test. Furthermore, any attempt to prevent a hostile takeover necessarily violates someone’s prop-erty and contract rights. This chapter analyzes the topic of acquisitions and mergers from the perspectives of utilitarian ethics and rights theory, and discusses the ethical issues involving hostile takeovers and the attempts that have been made to prevent them.