A “bear hug” in the context of business and finance typically refers to an aggressive and friendly takeover attempt by one company towards another. It involves making an enticing and persuasive offer to acquire the target company, often with the intention of convincing its management and board of directors to accept the proposal.

Key characteristics of a bear hug in the business world include:

1. **Friendly Intent:**
– A bear hug is generally characterized by a friendly and cooperative approach. The acquiring company expresses a strong desire to merge with or acquire the target and may outline the potential benefits of the proposed transaction.

2. **Strategic Rationale:**
– The acquirer typically highlights the strategic rationale behind the proposed merger or acquisition. This could include synergies, cost savings, increased market share, or other strategic advantages.

3. **Terms of the Offer:**
– The offer presented in a bear hug includes the proposed terms of the transaction, such as the purchase price, method of payment (cash, stock, or a combination), and other relevant details.

4. **Communication:**
– A bear hug is often initiated through formal communication channels, such as a written letter from the acquiring company’s management to the target company’s board of directors. The communication is intended to be persuasive and may encourage discussions between the two parties.

5. **Timing:**
– The timing of a bear hug is strategic and may be influenced by various factors, including changes in market conditions, the target company’s performance, or broader industry trends.

6. **Negotiation Process:**
– Following a bear hug, negotiations between the acquirer and the target company’s management typically ensue. Both parties may engage in discussions to refine the terms of the offer, address concerns, and potentially reach a mutually agreeable deal.

7. **Due Diligence:**
– Before finalizing any deal, the acquiring company usually conducts thorough due diligence to assess the target company’s financial health, operations, and potential risks.

8. **Board Approval:**
– Ultimately, the success of a bear hug depends on the target company’s board of directors and its shareholders. The board evaluates the offer, seeks legal and financial advice, and decides whether to accept, reject, or negotiate the terms.

It’s worth noting that while a bear hug is generally a friendly approach, the target company’s management and board might still resist the acquisition, especially if they believe the offered terms undervalue the company or if they have concerns about the proposed merger.

The term “bear hug” is more commonly used in the business and mergers and acquisitions (M&A) context, and its usage can vary in different regions and industries.