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Simple English definitions for legal terms
corporate raider
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A quick definition of corporate raider:
A corporate raider is someone who buys a lot of a company's shares so they can control it. Then they might sell off parts of the company or make it merge with another company. They do this because they think the parts of the company are worth more than the whole company. In the past, companies had a hard time stopping corporate raiders, so some raiders would use a tactic called greenmail. This means they would buy a lot of shares and then sell them back to the company for more money than they paid. But now, companies have ways to stop corporate raiders, so it doesn't happen as much anymore.
A more thorough explanation:
Corporate raider is a term used to describe a person or group of people who buy a controlling share of a company and then sell off its assets or force a merger with another company. The money made from selling the assets is then divided among the shareholders.
For example, if a corporate raider buys a controlling share of a company that owns several valuable properties, they may sell those properties to make a profit. This can leave the company with fewer assets and less value.
In the 1980s, corporate raiders were common because there were few ways for companies to prevent them. One tactic used by corporate raiders was called greenmail. In greenmail, the raider would buy a controlling share of a company and then sell those shares back to the company for a higher price. The company would have to pay the higher price to avoid being dissolved.
Today, companies have adopted poison pill clauses and regulatory taxes to prevent corporate raiders from taking over. These measures make it less profitable for raiders to buy controlling shares of companies.