DEFINITION: The colloquial term “raider”—short for “corporate raider”—refers to a corporation or its leadership team which participates in the effort to take over another corporation against the will of its current management.
Such an effort is known as a “hostile takeover.”
ETYMOLOGY: The word “raid” derives, via Scottish English, from the Old English word rād, meaning “ride” or “raid.”
“Raider” is a metaphor which alludes to historical raiding societies, such as the Vikings and others.
USAGE: Corporate raiders operate according to the following process.
The first step is to buy a large stake in a target corporation, ideally a majority share.
The second step is for the raider corporation to use its newly acquired shareholder voting rights to put through certain measures that are ostensibly designed to increase the target company’s share value. However, these measures actually make it easier for the raider to acquire the target company against the wishes of its current management.
Such measures may range widely, from replacing the target company’s top management with executives more sympathetic to the raider, to downsizing the target company’s operations, to liquidating the company altogether.
The era of corporate raiders stretched from the 1970s through the 1990s.
In the twenty-first century, the practice has declined due to the invention of new means of legal defense on the part of target companies’ management teams.
These measures include such strategies as poison pills, golden parachutes, and taking on increased levels of debt.