The intent of the acquisition is to circumvent the takeover of the object of interest by a third, unfriendly entity, which is perceived to be less favorable. The first type, the white knight, refers to the friendly acquirer of a target firm in a hostile takeover attempt by another firm.
White knights are preferred by the board of directors (when directors are acting in good faith with regards to the interest of the corporation and its shareholders) and/or management as in most cases as they do not replace the current board or management with a new board, whereas, in most cases, a black knight will seek to replace the current board of directors and/or management with its new board reflective of its net interest in the corporation's equity. This may be during a period while it is facing a hostile acquisition from another potential acquirer ( black knight) or it is facing bankruptcy. In business, a white knight is a friendly investor that acquires a corporation at a fair consideration with the support from the corporation's board of directors and management.
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