Are Vague Taleo Rumors Likely to be True?

Taleo Corporation (NASDAQ: TLEO) is a talent management company that primarily uses cloud computing to determine optimal business strategies. By using proprietary algorithms, Taleo aims to optimize head hunting for large firms. Rumors started to circulate that Taleo might be a takeover target by another company, and its stock rallied over 7.5% today. However, is there any truth behind the rumors?The first thing that people need to understand in mergers and acquisitions is that there are two types of buyers. Strategic buyers are primarily looking for companies that significantly add value to their operations. They want to acquire a company to gain market share in a geographic region or an untapped market. They may also consider purchasing a company so it can streamline operations and save costs. Ultimately, the potential synergies from a merger is what strategic buyers are concerned with.Financial buyers are not so much concerned with the qualitative aspects of a company as strategic buyers, Essentially, they want to purchase a company and use its cash flows to make money during the holding period or even after. If a financial buyer pursues a leveraged buyout, it can use the cash flows to pay down the debt during the holding period and then resell the company after a variable amount of time. Private equity firms commonly use this strategy in their ventures. Frequently, financial buyers will have to make certain ...

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