Black Knight - Finance

Finance

While a White Knight is a company or business "savior," a Black Knight is a "destroyer." It is difficult to identify a Black Knight when they first enter a company or business.

Typically, a Black Knight will enter a business/company as an influential person such as a major investor or a member of the board of directors of a profitable or asset rich business. The Black Knight will undertake dealings to enrich themselves which normally leave the previously profitable company in a weaker financial position.

Typically, the Black Knight will dismantle a profitable or asset rich business. This can be done through several ways including:

i) Siphoned out cash through high personal expenses, salaries and bonuses; ii) Selling off profitable parts of the business to a private company related to the Black Knight; iii) Buying of unprofitable businesses / assets previously owned by the Black Knight; iv) Selling of assets at below market value to persons related to the Black Knight; and v) Buying of assets at inflated prices.

Some people refer to a Black Knight as an investor who acquires a firm opposing the will of its management, as in a hostile takeover. This is only partially true as the ultimate intention of acquirer is unknown. It could be for business reasons and not personal reasons, such as merging the entity with another entity owned by the acquirer to create synergy.

A real Black Knight's intention is to enrich himself usually destroying the company or business in the process.