Why are hostile takeovers difficult to complete in the U.S.?

Hostile takeovers in the U.S. present significant challenges primarily due to the protective measures embedded within state incorporation laws. These laws enable management teams of target companies to employ various defensive strategies to avoid being taken over against their will. For instance, management can implement poison pills, which make the company's stock less attractive to potential acquirers by allowing existing shareholders to purchase additional shares at a discount, thereby diluting the potential acquirer's stake.

Additionally, state corporate governance regulations may grant boards of directors substantial authority and discretion to fend off unwanted takeover attempts. This framework is designed to protect the interests of the company, its employees, and its shareholders from abrupt changes in control that might not align with the long-term goals of the business or its stakeholders.

The other factors mentioned may contribute to the overall complexity of hostile takeovers, but they do not encapsulate the core legal and strategic barriers as effectively as the influence of state incorporation laws. For example, while buyers might indeed require extensive financial backing, this need does not directly impede the ability to execute a takeover once financial resources have been secured. Similarly, regulatory bodies oversee corporate practices, but they generally focus on ensuring fair practices rather than outright prohibiting hostile takeovers. The critical aspect that makes these transactions