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Finance, a la shmoop. What is a corporate raider? Well here's an Oakland Raider and [Oakland Raider football player]

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here's a corporate raider and yeah eerily similar in that pirate vibe huh [Old guy wearing a suit with a hook for a hand]

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Why? Well a corporate raider is more or less what Gordon Gekko did if you saw [Michael Douglas smoking a cigar]

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the original Wall Street and other than while the insider information he gleaned [Folder of insider information]

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courtesy of Denise Richards X while corporate raiding is actually legal so [Love, Charlie Sheen is written on the folder]

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what happens in a corporate raid? Well the raider becomes a dissident

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shareholder buying enough of a stake in the company to vote herself or her [Woman walking up to board table]

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representatives seats on the board of directors.

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Remember common shareholders elect the board the board hires the CEO and fires

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the CEO and you know it helps to set a lot of policy sort of like my aunt at the [Red cross appears over the CEO]

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dentist, yeah. So what's raiding well a company might have a fully funded [Aunt holding a chainsaw to the dentist]

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pension fund, responsible financials which now the company will be quote [100 dollar bills falling]

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punished for unquote. Well that pension can serve as collateral for the company

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to borrow against to do stuff like buyback its own stock maybe you know or [Company handing over cash for the stock]

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buy a competitor, or pay a big fat dividend whether it really needs to or [Shareholders protesting for a dividend]

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not. Well in this case the company is raiding their pension fund to pay for

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all this junk, like you know when you bust into your savings to buy Beyonce [Piggy bank being smashed]

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tickets. Well raiding can also mean that the new

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board either with this regretful help of the old CEO or with the help of a newly [New CEO kicks the old CEO away]

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recruited CEO sells off parts of itself short-term profits and the stock pops and [Green arrow appears]

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then the company dies yeah that's the fear anyway. Well many conglomerates have [Skull and crossbones appears]

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dozens of divisions like think GE each of which do business with you know one

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another over time but at any given moment in time one division might be in

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favor and it would sell for a high multiple at auction among competitors. [Wind turbines spinning]

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So maybe the raider puts that division on eBay and gets a bunch of cash for it [An investment division listed on ebay]

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and yes then it pays taxes on it too but we'll get to that later. There are [Taxed sign appears]

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usually many things that companies can do in this vein of short-term greed

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which according to Gordon is good, to goose their [Michael Douglas sat in a pool of money]

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stock price and yes that only happens in the short term

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only to find that the next business cycle well they're willfully unprepared [Business slides into a dip in output level]

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to fight the fight and they end up just kind of anemic and yeah that's the [Money disappears from a vault]

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problem by the time that next cycle comes around

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and the tide goes out, well the raider pirates have sold their shares and have [Raider getting cash from the market they have sold their shares to]

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gone on to go attack some other company having you know just kind of moved on [Company explodes and disappears]

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they watched it rise and then they sold and that's it they don't have to stick

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around and run the company, sell their shares they're never heard from again [Ship sailing into the sunset]

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take their profits and do damage elsewhere. Yeah so it's painful but in

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practice corporate raiding generally only happens to companies who have

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stumbled and can't really defend themselves you're not gonna get a whole

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lot of corporate raiding at Amazon or Google or Facebook because the companies are [Google campus]

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doing really well and anyone who came in to try to buy their stock and be hostile

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with the board would be shown the door there real quick yeah but in the case of [Woman tries to force her way into the board and is kicked out]

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companies like GE and well you saw what happened at Sears and Toys R Us and soon

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Target and a few others were all stumbling yeah well then they get raided, the company [Companies sinking into the ocean]

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slowly drowns and it's now raided and or weak in condition and yeah dinner coming [Shark eats Sears logo]

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there for you there Sharky..

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