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What is a White Squire? Exploring Its Legal Definition and Implications
Definition & Meaning
A white squire is an investor who acquires a significant stake in a company to help protect it from hostile takeover attempts. By holding a majority of shares, the white squire can act in the company's best interest, making it more difficult for potential buyers to gain enough control to complete a takeover. This strategy is often employed to maintain stability within the company and ensure that it remains under the control of its current management team.
Table of content
Legal Use & context
The term "white squire" is primarily used in corporate law and finance. It is relevant in contexts involving mergers and acquisitions, where companies seek to defend themselves against unwanted takeover bids. Legal professionals may encounter this term when advising clients on antitakeover strategies or when drafting shareholder agreements. Users can manage related paperwork through legal templates provided by US Legal Forms, which are designed to assist in these situations.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A private equity firm purchases a large block of shares in a publicly traded company to prevent a competitor from acquiring it. By doing so, the firm acts as a white squire, ensuring that the company's management remains intact.
Example 2: A wealthy individual buys a majority stake in a family-owned business facing a takeover threat. The individual intends to support the current management and maintain the company's operations as they are. (hypothetical example)
Comparison with related terms
Term
Definition
Difference
White Knight
An investor who offers to buy a company to prevent a hostile takeover.
A white knight is a friendly alternative, while a white squire retains majority control.
Hostile Takeover
An acquisition attempt that is resisted by the target company's management.
A white squire aims to prevent a hostile takeover, while a hostile takeover seeks to bypass management.
Common misunderstandings
What to do if this term applies to you
If you believe that your company may be at risk of a hostile takeover, consider reaching out to a financial advisor or legal professional who can help you explore options like engaging a white squire. Additionally, you can utilize US Legal Forms to find templates for shareholder agreements and other relevant documents to safeguard your interests.
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