Standstill Agreement

Yep. We all signed it. All of us. Ok, but that works in a museum. In the financial trenches, a standstill agreement refers to a kind of lessening of hostilities. Pac Man: Yep, the one we all know and love, bought 17% of the shares outstanding of Blinky, Pinky, and Inky, uh… Inc…

And in most companies, given that half or more of the shares never even vote in a proxy contest…that 17% is almost enough to control the company, by electing its own board of directors. So, instead of there being a hostile takeover, the company usually agrees to meet with Pac Man here, wokka wokka, and negotiate a strategy, or terms, to better run the company than it had been in the past.

And note that hostile takeovers generally only happen when the target company, the guy being eaten, has been poorly run for a long time and has only dubious shareholder support.

Like, try to do a hostile with Amazon or Facebook or Google. Even if they didn't have founder super voting stock, the stocks have done so well, that there'd be no support for upsetting the apple cart in these winners, because they've won so much in stock appreciation for their investors. And yes, that applies to Apple as well.

Once it’s been agreed upon, then, generally speaking, there would be a standstill agreement put in place. That is, our Pac Man would stand still. You know, like we do. And stop buying more shares beyond his 17 percent.

And hopefully the company will, uh, get back on course.