What is a bear hug in business?

A bear hug in business refers to an offer made by one company to purchase another at a substantial premium to its current market value. The term "bear hug" implies that the offer is so attractive that the target company is essentially being embraced or hugged by the acquiring company.

A bear hug offer is typically made directly to the board of directors or management of the target company, bypassing the formal auction process that is often used in mergers and acquisitions. This type of offer is usually made when the acquirer believes that there is a strong strategic fit between the two companies and that a quick acquisition is in the best interest of both parties.

Bear hugs can be considered hostile takeovers if the target company is not receptive to the offer. In some cases, a bear hug can put pressure on the target company to engage in negotiations, although there is no guarantee that the offer will ultimately be accepted.

Overall, bear hugs are a common tactic used in the world of mergers and acquisitions and can be an effective way for companies to quickly and decisively make a move to acquire another business.