white and black knights: the dynamics of M&A

black knight, white knight

In retellings of the Arthur legends, many times the heroes wore light-colored armor and the villains black.  Sometimes, though, the black knight was a good guy in disguise or just someone who didn’t have a steady job at the moment.

The “white hat = hero, black hat = villain” convention was much more rigorously applied in the cowboy movies that dominated film and TV a generation or more ago.

The visual cues continue today.  But since people don’t wear hats as often as they used to, and because product placement has become more important as a revenue source, the metaphor has changed.  In the TV adventure show 24, for instance, the heroes use Apple laptops, the bad guys use generic PCs (with logos that could be either Dell or HP).

still used in mergers an acquisitions

In mergers and acquisitions, the terminology remains the tried and true.  A black knight is a company that makes an unsolicited, unfriendly (i.e., against the wishes of the target) bid for another company.  A white knight defends the target by making a higher bid, with the approval–and often the encouragement–of the target’s management.  Why does this make any difference? Continue reading