Is there actually a way for US businesses to prevent themselves from hostile takeover? Like, can they be "private limited companies" and just refuse to merge?
Oh yes indeed - it all depends on what type of company it is. I am oversimplifying here, but there are (at least in the US four (and a half) types of companies based on ownership structure:
- Sole proprietorship : There is a dude named Bob Smith (BS) who owns Bob Smith Plumbing (BSP). BS and BSP are separate entities for tax purposes, but BS can do whatever the f**k he wants to with BSP - sell it, keep it, use its finances to expense hookers. The downside to Bob is that if BSP goes bankrupt, there is no barrier for creditors not to go after Bob personally.
- Partnership or Limited Liability Partnership: There is a group of people who own Bob Smith Plumbing, which may include Bob Smith, a rich uncle who gave him the money to finance his startup costs, whatever. The partners who own shares in it control 100% of what the company does, and nobody can force them to do anything they don't want to. But if things go tits-up the partners who aren't involved in day-to-day operation of the business (e.g. Bob's uncle) may be shielded from some bankruptcy or lawsuit claims while those who ran the business daily (e.g. Bob) are not.
- Corporation (private) : Here it gets interesting. Bob Smith Plumbing, Inc. is now legally separate from Bob or any of the owners - i.e., if BSP Inc. goes bankrupt, creditors can't come after Bob or the other owners. (In return for this legal separate personhood of the company, BSP Inc. must have independent board members, file quarterly reports and go through other legal oversight to prove that Bob isn't treating the corporation like a personal asset; if the books show that, creditors can "pierce the corporate veil" and hold Bob or the other shareholders personally liable.) Still, the owners are the owners and nobody can make them sell, not sell, or do anything else they don't want to. However, a large private corporation usually has a LOT of owners - founders, Venture Capitalists, etc. - and they all get to make big decisions based on the % of shares they own. If you get a buyout offer from $MEGACORP and the founders and employees (who own 49% of the shares) don't want to but the VCs (who own 51% of the shares) do, then you get bought out.
- Corporation (public): Same as above, but you are no longer owned just by founders, employees, VCs, etc.; you have started selling your shares to anyone who wants to buy (ranging from jackasses like you or me with E*Trade accounts to hedge funds and institutional investors). Going public is a goal for most companies because it converts your shares of the company into actual, you know, money (think turning potential energy into kinetic energy). But going public means that (as above) not only does your company have to follow the will of the Board (as elected by shareholders based on their % of shares held) but you also are subject to lawsuits from those shareholders (or criminal prosecution by the FTC) if you run the company in a way (e.g. turn down a lucrative buyout offer) that is deliberately against the monetary interest of shareholders. On a side note, public corporations can create ways to avoid hostile takeovers like Poison Pill plans, too... but if more than 50% of shareholders don't like your way of running the company, you are out.
I say "four and a half" (despite there being other business entity forms) because the last "half" is a company that's in Chapter 11 bankruptcy. Long story short, once you file, the previous owners of the company don't own s**t. The US government - in the form of a bankruptcy judge - now gets to decide what to do with the company, whether that means shutting it down, selling parts of it off at auction, or allowing the previous owners/managers to demonstrate that they have a plan to get the company back on its feet. Regardless, in bankruptcy nobody but the judge gets to decide what will happen to the company.