Startup Terms Glossary
What is a Safe Harbor?
If a startup wants to decrease the likelihood that their company might be affected by a hostile takeover, a strategy called a safe harbor might be placed into motion. A safe harbor involves a company intentionally acquiring a company that is heavily regulated. This helps make them appear less attractive to anyone looking to assert a hostile takeover since too many regulations can negatively impact the income of an acquiring entity.
Safe Harbor Examples
Examples of a safe harbor:
- Example 1. Often an amendment or bylaw in company contracts
- Example 2. Can only be set into motion in the event of a hostile takeover
- Example 3. Shields management from liability
- Example 4. Can also be helpful in reducing tax liability
Here’s another web page about a safe harbor.
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