Identify the factors which make a company a desirable candidate for a takeover from the acquirer's point of view.

It is possible to identify some characteristics that make a company a desirable candidate for a takeover from the acquirer's point of view. These are: Low stock price in relation to the replacement cost of assets of their potential earning power; A highly liquid balance sheet with large amounts of excess cash, a valuable securities portfolio, and significantly unused debt capacity; Good cash flow in relation to current stock prices; Subsidiaries and properties which could be sold off without significantly impairing cash flow; and Relatively small stockholdings under the control of an incumbent management.