M&A Imagery

The language of corporate mergers and acquisitions is filled with fairytale imagery which is used to describe various players in and aspects of the transactions. For example:

A Black Knight is a company that makes a hostile takeover offer on a target company. An allusion to the evil villain of many fairytales, this term demonstrates how a targeted company sees its adversary.

A White Knight is a company that is invited to make a friendly takeover offer to a target company that is being faced with a hostile takeover from a separate party and thereby prevent its acquisition by the hostile bidder, a so-called black knight.

Similar to a white knight, a White Squire is considered to be a friendly acquirer. However, white squires do not require a controlling interest in the target company as a white knight would, and instead of purchasing a majority interest, white squires purchase a lesser interest in the target firm.

A Gray (or “grey”) Knight is a second, unsolicited bidder in a corporate takeover that seeks to take advantage of problems between the first bidder and the target company.

A Yellow Knight is a company that once attempted a takeover and ends up discussing a merger with the target company. The implication being that the company attempting the takeover lost its nerve and opted for a mutually agreed merger instead of making an aggressive move.

Crown Jewels denote a particularly profitable or otherwise valuable corporate unit(s) or asset(s) – sometimes the most valuable unit of a corporation as measured by profitability, asset value, earning power, and future business prospects, etc. The crown jewels are often the main objective or target of takeover attempts and may be sold by the target company as part of a defensive strategy to make the rest of the company less attractive to the hostile bidder.

A Lady Macbeth Strategy is a corporate takeover strategy named after Shakespeare’s Lady Macbeth who devised a plan for her husband to kill the King of Scotland that required her to appear friendly and virtuous in order to gain the King’s trust. The Lady Macbeth Strategy requires a third party to pose as a white knight to gain trust. This purported white knight then turns around and joins with unfriendly bidders in a hostile takeover.