Investment Banking Tutorials
- Investment Banking Free Course
- Investment Banking Basics
- What is Investment Banking? (Overview of what do they actually do!)
- Investment Banking vs Commercial Banking
- Equity Research in an Investment Bank
- What is Asset Management Company AMC
- Sales and Trading in Investment Banking
- Private Placement, IPO and FPO in Investment Banking
- Investment Banking – Underwriters and Market Makers
- Investment Banking – Mergers and Acquisitions
- Investment Banking – Restructuring and Reorganisation
- Investment Banking Roles and Responsibilities
- Market Makers
- Propreitary Trading
- Deal Origination (Sourcing)
- Initial Public Offering (IPO)
- Top 4 Must Know Investment Banking Charts (Free Download Template included)
- Pitch Book | Guide to Investment Banking Pitch Book (Examples)
- What is LBO?
- Leverage buyout Lbo Analysis
- LBO Financing
- Trading Floor
- Market Order vs Limit Order
- Merchant Bank
- Best Investment Banking Books
- Nasdaq vs Dow Jones
- Nasdaq vs Nyse
- Differences Between NSE and BSE
- Investment Banking Careers
- Investment Banking Interview Questions (with Answers)
- How to get into Investment Banking?
- Investment Banking Job Description
- Investment Banking Associate Salary
- Investment Banking Job For Graduates (Engineers) | Top 8 Tips
- How to get an Investment Banking Internship?
- Top 10 Finance Certifications Programs
- Investment Banking Lifestyle
- Investment Banking Exit Opportunities
- Investment Banking Case Studies
- Top 10 Best Finance courses (with Online Certification)
- Investor Relation Job Description
- Financial Analyst Job Description
- Investment Banking vs Equity Research
- Investment Banking vs Asset Management
- Commercial Banking vs Merchant Banking
- Investment Banking vs Corporate Banking
- Portfolio Management vs Investment Banking
- Investment Banking vs Hedge Fund Manager
- Investment Banking vs Investment Management
- Investment Banking vs Private Equity
- Careers in Trading
- Investment Banking Firms
- Top Bulge Bracket Investment Banks
- Top Middle Market Investment Banks
- Top Boutique Investment Banks
- Investment Banking in Dubai
- Investment Banking in Hong Kong
- Investment Banking in Russia
- Investment Banking in Brazil
- Investment Banking in China
- Investment Banking in Australia
- Investment Banking in Saudi Arabia
- Investment Banking in Singapore
- Investment Banking in London (UK)
- Investment Banking in India
- Investment Banking in Ireland
- Investment Banking in South Africa
- Investment Banking in Canada
- Investment Banking in Germany
- Investment Banking in France
- Investment Banking in Malaysia
- Investment Banking in Philippines
- Investment Banking in Boston
- Investment Banking in San Francisco
- Top Banks
- Top Banks in Australia
- Top Banks In Austria
- Top Banks In Bahrain
- Top Banks In Belgium
- Top Banks In Bermuda
- Top Banks In British Virgin Islands
- Top Banks In Brunei
- Top Banks In Canada
- Top Banks In Cayman Islands
- Top Banks In Denmark
- Top Banks In Finland
- Top Banks In France
- Top Banks In Germany
- Top Banks In Greenland
- Top Banks In Guernsey
- Top Banks In Ireland
- Top Banks In Isle of Man
- Top Banks In Japan
- Top Banks In Kuwait
- Top Banks In Liechtenstein
- Top Banks In Luxembourg
- Top Banks In Macau
- Top Banks In Norway
- Top Banks In Oman
- Top Banks in Pakistan
- Top Banks in Philippines
- Top Banks In Puerto Rico
- Top Banks In Qatar
- Top Banks In Saudi Arabia
- Banks in South Africa
- Top Banks In Singapore
- Top Banks In South Korea
- Top Banks In Sweden
- Top Banks In Switzerland
- Top Banks in UAE
- Top Banks in United Kingdom
- Top Banks in USA
- Mergers and Acquisitions
- What is Mergers and Acquisitions?
- Mergers vs Acquisitions
- Synergy in M&A
- Successful Mergers and Acquisitions
- Financing Acquisitions
- Statutory Merger
- Joint Venture
- White Knight
- Hostile Takeover
- Golden Parachute
- Poison Pills
- What is Amalgamation?
- Spin off vs Split Off
- Forward Integration
- Backward Integration
- Horizontal vs Vertical Integration
- What is Divesting / Divestiture?
- Bootstrap Effect
- PAC MAN Defense
- Flip-In Poison Pill
- Greenshoe Option
- Dawn Raid Takeovers
- Crown Jewels Defense
- Best Mergers and Acquisitions Books
- What is Asset Restructuring?
What is the concept of white knight in business?
A white knight is called a savior. In the battlefield, the white knight appears and saves the population from hostility and violence. As we all know, a business is a battle too. And the marketplace is a battlefield.
When a company becomes a target for a hostile takeover, then the company needs to be saved by somebody who would help the company grow. At this point the concept of the white knight comes into existence.
A white knight is an individual or a company that takes over a target company and saves it from a hostile takeover from a black knight (a black knight is an individual or a company that takes over a company by force). By being taken over by a white knight, the company still can’t remain independent. But it’s far better than being taken over by a black knight.
How can the target company save itself by finding out a white knight?
Since the year 2000, it was found that whenever there was a hostile takeover; it didn’t amplify the value of the company. The unwilling target company which was taken over by force couldn’t amount to more than $10 billion.
So, we can easily state that no hostile takeover was ever successful. Every company, thus, whenever they become a target for a hostile takeover, they need to make great effort to find out a white knight.
Otherwise, the near future of the target company would be the following –
- There would be no independence/autonomy in the company. And as a result, the company will lose its way and they need to adhere to the whims of a black knight.
- Secondly, the company would lose its vision, its values, and its future.
- Thirdly, the company wouldn’t be able to create value for their employees, customers, and stakeholders.
For a business, this is the worst scenario. And that’s why it’s important to find someone out who would take over the company in preferred terms (even when there won’t be full autonomy). In few cases, a white knight also acts as a savior for companies that are going to be bankrupt.
But, every target company doesn’t need a white knight. If the target company is way bigger or one of the largest companies in the industry, they need any white knight even when they face a chance of a hostile takeover.
Examples of White Knights that save companies from hostile takeover
Let’s have a look at few of them –
- In the year 1953, American Broadcasting Company was nearly bankrupt. At that time, United Paramount Theatres came in rescue for American Broadcasting Company (ABC) and acted as a white knight by buying ABC.
- In the year 1984, Walt Disney Productions faced a hostile bid from Saul Steinberg. Sid Bass and his sons acted as white knights and saved Walt Disney by buying significant portions of the same.
- In the year 1998, Digital Equipment Corporation is in pretty bad shape. At that time, Compaq came to rescue. By merging with Digital Equipment Corporation at that time, Compaq acted as a white knight.
- In 2006, there was ample talk about the merger of Mittal Steel and Arcelor. At that time, Severstal acted as a white knight to Arcelor.
- In the year 2008, JPMorgan Chase acquired Bear Stearns. At that time Bear Stearns was struggling to keep their stock price up. And if JPMorgan Chase would not have acquired them, they would need to file for insolvency. At that time JPMorgan Chase acted as a white knight.
Another type of knight – Grey Knights
Understanding the concept of white knight wouldn’t be complete until you get to understand three types of a knight.
We all know by now that white knight acts as a savior and black knight bids for a hostile takeover.
But what we need to understand is there’s another type of knight. We call it a grey knight. Grey Knights are not as good as white knights. And at the same time, they are not as hostile as black knights. If there’s a situation where a company isn’t able to find someone who is a white knight, then they can go for the option of being taken over by the grey knight. At least, it would be a better option than being taken over by a black knight.
This has been a guide to White Knight, its definition along with practical examples. Here we also discuss how a company can save itself by finding a white knight. You may also learn more from these articles below –