Corporate raid
Encyclopedia
A corporate raid is an American English business
term for buying a large interest in a corporation
and then using voting rights to enact measures directed at increasing the share value. The measures might include replacing top executives, downsizing operations, or liquidating
the company.
By the end of the 1980s, management of many large publicly traded corporation
s reacted negatively to the threat of potential hostile takeover or corporate raid and pursued drastic defensive measures including poison pill
s, golden parachute
s and increasing debt
levels on the company's balance sheet
.
In later years, many of the corporate raiders would be re-characterized as "activist shareholder
s".
, Victor Posner
, Nelson Peltz
, Robert M. Bass
, T. Boone Pickens, Harold Clark Simmons
, Kirk Kerkorian
, Sir James Goldsmith, Saul Steinberg
and Asher Edelman
. These investors used a number of the same tactics and targeted the same type of companies as more traditional leveraged buyouts and in many ways could be considered a forerunner of the later private equity firms. In fact it is Posner, one of the first "corporate raiders" who is often credited with coining the term "leveraged buyout
" or "LBO"
Victor Posner
, who had made a fortune in real estate investments in the 1930s and 1940s, acquired a major stake in DWG Corporation in 1966. Having gained control of the company, used it as an investment vehicle that could execute takeover
s of other companies. Posner and DWG are perhaps best known for the hostile takeover of Sharon Steel Corporation
in 1969, one of the earliest such takeovers in the United States. Posner's investments were typically motivated by attractive valuations, balance sheets and cash flow characteristics. Because of its high debt load, Posner's DWG would generate attractive but highly volatile returns and would ultimately land the company in financial difficulty. In 1987, Sharon Steel entered Chapter 11
bankruptcy protection.
Carl Icahn
developed a reputation as a ruthless "corporate raider" after his hostile takeover of TWA
in 1985. The result of that takeover was Icahn systematically selling TWA's assets to repay the debt he used to purchase the company, which was described as asset stripping
.
Many of the corporate raiders of the 1980s were onetime clients of Michael Milken
, whose investment banking firm, Drexel Burnham Lambert
helped raise blind pools of capital which corporate raiders could use to make legitimate attempts to take over companies and provide high-yield debt
financing of the buyouts.
and his holding company Triangle Industries (later Triarc) to give credibility for takeovers, representing the first major blind pool raised for this purpose. Two years later, in 1986, Wickes Companies, a holding company
run by Sanford Sigoloff would raise a $1.2 billion blind pool. In later years, Milken and Drexel would shy away from certain of the more "notorious" corporate raiders as the firm and the private equity industry attempted to move upscale.
In 1985, Milken raised a $750 million for a similar blind pool for Ronald Perelman
which would ultimately prove instrumental in acquiring his biggest target: The Revlon Corporation
. In 1980, Ronald Perelman
, the son of a wealthy Philadelphia businessman, and future "corporate raider" having made several small but successful buyouts, acquired MacAndrews & Forbes
, a distributor of licorice extract and chocolate, that Perelman's father had tried and failed to acquire 10 years earlier. Perelman would ultimately divest the company's core business and use MacAndrews & Forbes
as a holding company investment vehicle for subsequent leveraged buyouts including Technicolor, Inc.
, Pantry Pride
and Revlon
. Using the Pantry Pride
subsidiary of his holding company, MacAndrews & Forbes Holdings
, Perelman's overtures were rebuffed. Repeatedly rejected by the company's board and management, Perelman continued press forward with a hostile takeover raising his offer from an initial bid of $47.50 per share until it reached $53.00 per share. After receiving a higher offer from a white knight
, private equity firm Forstmann Little & Company
, Perelman's Pantry Pride
finally was able to make a successful bid for Revlon
, valuing the company at $2.7 billion. The buyout would prove troubling, burdened by a heavy debt load. Under Perelman's control, Revlon sold 4 divisions: two of which were sold for $1 billion, its vision care division was sold for $574 million and its National Health Laboratories division was spun out to the public market in 1988. Revlon also made acquisitions including Max Factor
in 1987 and Betrix in 1989 later selling them to Procter & Gamble
in 1991. Perelman exited the bulk of his holdings in Revlon through an IPO in 1996 and subsequent sales of stock. As of December 31, 2007, Perelman still retains a minority ownership interest in Revlon. The Revlon takeover, because of its well-known brand was profiled widely by the media and brought new attention to the emerging boom in leveraged buyout activity.
, ultimately losing money for their investors. Additionally, with the fall of Michael Milken
and the subsequent collapse of Drexel Burnham Lambert
, the credit lines for these investors dried up. By the end of the decade, management of many large publicly traded corporation
s reacted negatively to the threat of potential hostile takeover or corporate raid and pursued drastic defensive measures including poison pill
s, golden parachute
s and increasing debt
levels on the company's balance sheet
. Finally, in the 1990s the overall price of the American stock market increased, which reduced the number of situations in which a company's share price was low with respect to the assets that it controlled.
By the end of the 1990s, the corporate raider moniker was used less frequently as private equity firms pursued different tactics than their predecessors. Additionally, with revisionist history, in later years many of the corporate raiders would be re-characterized as "activist shareholder
s". Carl Icahn
received very favorable treatment from his 2008 profile on CBS's 60 Minutes
.
Additionally, the threat of the corporate raid would lead to the practice of "greenmail
", where a corporate raider or other party would acquire a significant stake in the stock of a company and receive an incentive payment (effectively a bribe) from the company in order to avoid pursuing a hostile takeover of the company. Greenmail
represented a transfer payment from a company's existing shareholders to a third party investor and provided no value to existing shareholders but did benefit existing managers.
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
term for buying a large interest in a corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
and then using voting rights to enact measures directed at increasing the share value. The measures might include replacing top executives, downsizing operations, or liquidating
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
the company.
By the end of the 1980s, management of many large publicly traded corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s reacted negatively to the threat of potential hostile takeover or corporate raid and pursued drastic defensive measures including poison pill
Poison pill
A shareholder rights plan, colloquially known as a "poison pill", or simply "the pill" is a type of defensive tactic used by a corporation's board of directors against a takeover...
s, golden parachute
Golden parachute
A golden parachute is an agreement between a company and an employee specifying that the employee will receive certain significant benefits if employment is terminated. Sometimes, certain conditions, typically a change in company ownership, must be met, but often the cause of termination is...
s and increasing debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
levels on the company's balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
.
In later years, many of the corporate raiders would be re-characterized as "activist shareholder
Activist shareholder
An activist shareholder uses an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial to non-financial...
s".
History
Corporate raids became the hallmark of a handful of investors in the 1970s and 1980s. Among the most notable corporate raiders of the 1980s were Carl IcahnCarl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
, Victor Posner
Victor Posner
Victor Posner was an American businessman. He was known as one of the highest paid business executives of his generation. He was a pioneer of the leveraged buyout.-Career:...
, Nelson Peltz
Nelson Peltz
Nelson Peltz is an American businessman. He is a board director of Wendy's Group, the franchise parent of T.J. Cinnamons, Pasta Connection and Wendy's. Peltz is the former owner of Snapple.- Background :...
, Robert M. Bass
Robert Bass
Robert Muse Bass is an American businessman and philanthropist. He is currently the chairman of Aerion Corporation, an American aerospace firm in Reno, Nevada. Bass is worth approximately $5.5 billion as of 2007, and $4 billion in 2010 on oil and other investments-Life:Bass was born into a wealthy...
, T. Boone Pickens, Harold Clark Simmons
Harold Clark Simmons
Harold Clark Simmons is an American businessman and billionaire whose banking expertise helped him develop the acquisition concept known as the leveraged buyout to acquire various corporations. He is the owner of Contran Corporation and of Valhi, Inc.,...
, Kirk Kerkorian
Kirk Kerkorian
Kerkor "Kirk" Kerkorian is an American businessman who is the president/CEO of Tracinda Corporation, his private holding company based in Beverly Hills, California. Kerkorian is known as one of the important figures in shaping Las Vegas and, with architect Martin Stern, Jr...
, Sir James Goldsmith, Saul Steinberg
Saul Steinberg (business)
Saul Steinberg is a former financier, insurance executive, and corporate raider. He started a computer leasing company , which he used in an audacious and successful takeover of the much larger Reliance Insurance Company in 1968...
and Asher Edelman
Asher Edelman
Asher Edelman began his career on Wall Street in 1961. In 1969 he formed Mack, Bushnell and Edelman where he was CEO. Edelman’s Wall Street businesses included Investment Banking, Money Management, and Derivatives Trading...
. These investors used a number of the same tactics and targeted the same type of companies as more traditional leveraged buyouts and in many ways could be considered a forerunner of the later private equity firms. In fact it is Posner, one of the first "corporate raiders" who is often credited with coining the term "leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
" or "LBO"
Victor Posner
Victor Posner
Victor Posner was an American businessman. He was known as one of the highest paid business executives of his generation. He was a pioneer of the leveraged buyout.-Career:...
, who had made a fortune in real estate investments in the 1930s and 1940s, acquired a major stake in DWG Corporation in 1966. Having gained control of the company, used it as an investment vehicle that could execute takeover
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
s of other companies. Posner and DWG are perhaps best known for the hostile takeover of Sharon Steel Corporation
Sharon Steel Corporation
The Sharon Steel Corporation was once a steel plant, and is notable due to its contribution toward the growth of the iron and steel industry in the Shenango River Valley, Mercer County, Pennsylvania....
in 1969, one of the earliest such takeovers in the United States. Posner's investments were typically motivated by attractive valuations, balance sheets and cash flow characteristics. Because of its high debt load, Posner's DWG would generate attractive but highly volatile returns and would ultimately land the company in financial difficulty. In 1987, Sharon Steel entered Chapter 11
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
bankruptcy protection.
Carl Icahn
Carl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
developed a reputation as a ruthless "corporate raider" after his hostile takeover of TWA
Trans World Airlines
Trans World Airlines was an American airline that existed from 1925 until it was bought out by and merged with American Airlines in 2001. It was a major domestic airline in the United States and the main U.S.-based competitor of Pan American World Airways on intercontinental routes from 1946...
in 1985. The result of that takeover was Icahn systematically selling TWA's assets to repay the debt he used to purchase the company, which was described as asset stripping
Asset stripping
Asset stripping involves selling the assets of a business individually at a profit. The term is generally used in a pejorative sense as such activity is not considered productive to the economy. Asset stripping is considered to be a problem in economies such as Russia or China that are making a...
.
Many of the corporate raiders of the 1980s were onetime clients of Michael Milken
Michael Milken
Michael Robert Milken is an American business magnate, financier, and philanthropist noted for his role in the development of the market for high-yield bonds during the 1970s and 1980s, for his 1990 guilty plea to felony charges for violating US securities laws, and for his funding of medical...
, whose investment banking firm, Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
helped raise blind pools of capital which corporate raiders could use to make legitimate attempts to take over companies and provide high-yield debt
High-yield debt
In finance, a high-yield bond is a bond that is rated below investment grade...
financing of the buyouts.
Ronald Perelman and Revlon
Drexel Burnham raised a $100 million blind pool in 1984 for Nelson PeltzNelson Peltz
Nelson Peltz is an American businessman. He is a board director of Wendy's Group, the franchise parent of T.J. Cinnamons, Pasta Connection and Wendy's. Peltz is the former owner of Snapple.- Background :...
and his holding company Triangle Industries (later Triarc) to give credibility for takeovers, representing the first major blind pool raised for this purpose. Two years later, in 1986, Wickes Companies, a holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
run by Sanford Sigoloff would raise a $1.2 billion blind pool. In later years, Milken and Drexel would shy away from certain of the more "notorious" corporate raiders as the firm and the private equity industry attempted to move upscale.
In 1985, Milken raised a $750 million for a similar blind pool for Ronald Perelman
Ronald Perelman
Ronald Owen Perelman is an American business magnate. Through his company MacAndrews & Forbes Holdings Inc., he has invested in various companies in grocery, cigar, licorice, makeup, car, photography, television, camping, security, lottery, jewelry, banks, and comic book industries.-Early...
which would ultimately prove instrumental in acquiring his biggest target: The Revlon Corporation
Revlon
Revlon is an American cosmetics, skin care, fragrance, and personal care company founded in 1932.-History:Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the "L" in the Revlon name...
. In 1980, Ronald Perelman
Ronald Perelman
Ronald Owen Perelman is an American business magnate. Through his company MacAndrews & Forbes Holdings Inc., he has invested in various companies in grocery, cigar, licorice, makeup, car, photography, television, camping, security, lottery, jewelry, banks, and comic book industries.-Early...
, the son of a wealthy Philadelphia businessman, and future "corporate raider" having made several small but successful buyouts, acquired MacAndrews & Forbes
MacAndrews & Forbes Holdings
MacAndrews & Forbes Holdings, Inc. is the principal holding company used by and wholly owned by businessman and private equity investor, Ronald Perelman...
, a distributor of licorice extract and chocolate, that Perelman's father had tried and failed to acquire 10 years earlier. Perelman would ultimately divest the company's core business and use MacAndrews & Forbes
MacAndrews & Forbes Holdings
MacAndrews & Forbes Holdings, Inc. is the principal holding company used by and wholly owned by businessman and private equity investor, Ronald Perelman...
as a holding company investment vehicle for subsequent leveraged buyouts including Technicolor, Inc.
Technicolor
Technicolor is a color motion picture process invented in 1916 and improved over several decades.It was the second major process, after Britain's Kinemacolor, and the most widely used color process in Hollywood from 1922 to 1952...
, Pantry Pride
Pantry Pride
Food Fair, also known by its successor name Pantry Pride, was a large supermarket chain in the United States. It was founded by Samuel N. Friedland, who opened the first store in Harrisburg, Pennsylvania in the late 1920s. As of 1957, Food Fair had 275 stores, and at its peak, the chain had more...
and Revlon
Revlon
Revlon is an American cosmetics, skin care, fragrance, and personal care company founded in 1932.-History:Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the "L" in the Revlon name...
. Using the Pantry Pride
Pantry Pride
Food Fair, also known by its successor name Pantry Pride, was a large supermarket chain in the United States. It was founded by Samuel N. Friedland, who opened the first store in Harrisburg, Pennsylvania in the late 1920s. As of 1957, Food Fair had 275 stores, and at its peak, the chain had more...
subsidiary of his holding company, MacAndrews & Forbes Holdings
MacAndrews & Forbes Holdings
MacAndrews & Forbes Holdings, Inc. is the principal holding company used by and wholly owned by businessman and private equity investor, Ronald Perelman...
, Perelman's overtures were rebuffed. Repeatedly rejected by the company's board and management, Perelman continued press forward with a hostile takeover raising his offer from an initial bid of $47.50 per share until it reached $53.00 per share. After receiving a higher offer from a white knight
White knight (business)
In business, a white knight, or "friendly investor," may be a corporation or a person that intends to help another firm. There are many types of white knights...
, private equity firm Forstmann Little & Company
Forstmann Little & Company
Forstmann, Little & Company is a private equity firm, specializing in leveraged buyouts . At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally...
, Perelman's Pantry Pride
Pantry Pride
Food Fair, also known by its successor name Pantry Pride, was a large supermarket chain in the United States. It was founded by Samuel N. Friedland, who opened the first store in Harrisburg, Pennsylvania in the late 1920s. As of 1957, Food Fair had 275 stores, and at its peak, the chain had more...
finally was able to make a successful bid for Revlon
Revlon
Revlon is an American cosmetics, skin care, fragrance, and personal care company founded in 1932.-History:Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the "L" in the Revlon name...
, valuing the company at $2.7 billion. The buyout would prove troubling, burdened by a heavy debt load. Under Perelman's control, Revlon sold 4 divisions: two of which were sold for $1 billion, its vision care division was sold for $574 million and its National Health Laboratories division was spun out to the public market in 1988. Revlon also made acquisitions including Max Factor
Max Factor
Max Factor & Company is a cosmetics company, founded during 1909 by Maksymilian Faktorowicz , Max Factor, a Polish-Jewish cosmetician. Max Factor & Company was a related, two-family, multi-generational international cosmetics company before its sale in 1973 for $500 million dollars...
in 1987 and Betrix in 1989 later selling them to Procter & Gamble
Procter & Gamble
Procter & Gamble is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods....
in 1991. Perelman exited the bulk of his holdings in Revlon through an IPO in 1996 and subsequent sales of stock. As of December 31, 2007, Perelman still retains a minority ownership interest in Revlon. The Revlon takeover, because of its well-known brand was profiled widely by the media and brought new attention to the emerging boom in leveraged buyout activity.
Decline of the corporate raiders
In the late 1980s several famous corporate raiders suffered from bad investments financed by large amounts of leverageLeverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...
, ultimately losing money for their investors. Additionally, with the fall of Michael Milken
Michael Milken
Michael Robert Milken is an American business magnate, financier, and philanthropist noted for his role in the development of the market for high-yield bonds during the 1970s and 1980s, for his 1990 guilty plea to felony charges for violating US securities laws, and for his funding of medical...
and the subsequent collapse of Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
, the credit lines for these investors dried up. By the end of the decade, management of many large publicly traded corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s reacted negatively to the threat of potential hostile takeover or corporate raid and pursued drastic defensive measures including poison pill
Poison pill
A shareholder rights plan, colloquially known as a "poison pill", or simply "the pill" is a type of defensive tactic used by a corporation's board of directors against a takeover...
s, golden parachute
Golden parachute
A golden parachute is an agreement between a company and an employee specifying that the employee will receive certain significant benefits if employment is terminated. Sometimes, certain conditions, typically a change in company ownership, must be met, but often the cause of termination is...
s and increasing debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
levels on the company's balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
. Finally, in the 1990s the overall price of the American stock market increased, which reduced the number of situations in which a company's share price was low with respect to the assets that it controlled.
By the end of the 1990s, the corporate raider moniker was used less frequently as private equity firms pursued different tactics than their predecessors. Additionally, with revisionist history, in later years many of the corporate raiders would be re-characterized as "activist shareholder
Activist shareholder
An activist shareholder uses an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial to non-financial...
s". Carl Icahn
Carl Icahn
Carl Celian Icahn is an American business magnate and investor.-Biography:Icahn was raised in Far Rockaway, Queens, New York City, where he attended Far Rockaway High School. His father was a cantor, his mother was a schoolteacher...
received very favorable treatment from his 2008 profile on CBS's 60 Minutes
60 Minutes
60 Minutes is an American television news magazine, which has run on CBS since 1968. The program was created by producer Don Hewitt who set it apart by using a unique style of reporter-centered investigation....
.
Criticism
Opponents of the corporate raid argue that this typically occurs only with well-run companies who are successfully managing their money. In addition, they argue that corporate raids cause large economic disruption and create unemployment as factories are sold off and closed. Proponents of the corporate raid argue that companies which have huge assets and low stock prices are not managing their money well and should either attempt to regain market confidence (thereby boosting their share prices) or else liquidate some of their assets and return the money to their shareholders.Additionally, the threat of the corporate raid would lead to the practice of "greenmail
Greenmail
Greenmail or greenmailing is the practice of purchasing enough shares in a firm to threaten a takeover and thereby forcing the target firm to buy those shares back at a premium in order to suspend the takeover....
", where a corporate raider or other party would acquire a significant stake in the stock of a company and receive an incentive payment (effectively a bribe) from the company in order to avoid pursuing a hostile takeover of the company. Greenmail
Greenmail
Greenmail or greenmailing is the practice of purchasing enough shares in a firm to threaten a takeover and thereby forcing the target firm to buy those shares back at a premium in order to suspend the takeover....
represented a transfer payment from a company's existing shareholders to a third party investor and provided no value to existing shareholders but did benefit existing managers.
Media reflections of corporate raiders
Although private equity rarely received a thorough treatment in popular culture, several films did feature stereotypical "corporate raiders" prominently. Among the most notable examples of private equity featured in motion pictures included:- Gordon Gekko, Wall Street (1987) and Wall Street: Money Never Sleeps (2008)– The notorious "corporate raider" and greenmailer, Gordon GekkoGordon GekkoGordon Gekko is the main antagonist of the 1987 film Wall Street and the antihero of the 2010 film Wall Street: Money Never Sleeps, both by director Oliver Stone...
(played by Michael DouglasMichael DouglasMichael Kirk Douglas is an American actor and producer, primarily in movies and television. He has won three Golden Globes and two Academy Awards; first as producer of 1975's Best Picture, One Flew Over the Cuckoo's Nest, and as Best Actor in 1987 for his role in Wall Street. Douglas received the...
), represents a synthesis of the worst features of various famous private equity figures. In the film, the character intends to manipulate an ambitious young stockbroker to take over a failing, but decent, airlineAirlineAn airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...
. Although Gekko makes a pretense of caring about the airline, his intentions prove to be to destroy the airline, strip its assets and lay off its employees before raiding the corporate pension fundPension fundA pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
. Gekko would become a symbol in popular culture for unrestrained greed (with the signature line, "Greed, for lack of a better word, is good") that would be attached to the private equity industry. - "Larry the Liquidator", Other People's MoneyOther People's MoneyOther People's Money is a 1991 drama/romantic comedy film starring Danny DeVito, Penelope Ann Miller and Gregory Peck. It is based on the play of the same name by Jerry Sterner. The director was Norman Jewison and the screenplay was credited to Alvin Sargent.-Plot:Corporate raider Lawrence...
(1990) – A self-absorbed corporate raider "Larry the Liquidator" (Danny DeVitoDanny DeVitoDaniel Michael DeVito, Jr. , better known as Danny DeVito, is an American actor, comedian, director and producer. He first gained prominence for his portrayal of Louie De Palma on the ABC and NBC television series Taxi , for which he won a Golden Globe and an Emmy.DeVito and his wife, Rhea Perlman,...
), sets his sights on New England Wire and Cable, a small-town business run by family patriarch Gregory PeckGregory PeckEldred Gregory Peck was an American actor.One of 20th Century Fox's most popular film stars from the 1940s to the 1960s, Peck continued to play important roles well into the 1980s. His notable performances include that of Atticus Finch in the 1962 film To Kill a Mockingbird, for which he won an...
who is principally interested in protecting his employees and the town. - Edward Lewis, Pretty WomanPretty WomanPretty Woman is a 1990 romantic comedy film set in Los Angeles, California. Written by J.F. Lawton and directed by Garry Marshall, this motion picture features Richard Gere and Julia Roberts, and also Hector Elizondo, Ralph Bellamy, and Jason Alexander in supporting roles. Roberts played the only...
(1990) – Corporate raider Edward Lewis (Richard GereRichard GereRichard Tiffany Gere is an American actor. He began acting in the 1970s, playing a supporting role in Looking for Mr. Goodbar, and a starring role in Days of Heaven. He came to prominence in 1980 for his role in the film American Gigolo, which established him as a leading man and a sex symbol...
) attempts to make a hostile takeover of Morse Industries. Edward explains what he does for a living to Vivian (Julia RobertsJulia RobertsJulia Fiona Roberts is an American actress. She became a Hollywood star after headlining the romantic comedy Pretty Woman , which grossed $464 million worldwide...
): he buys large companies that are on the verge of bankruptcy, breaks them up and sells them in smaller parts, at a price that's more than the whole company, for profit. - On the soap opera General HospitalGeneral HospitalGeneral Hospital is an American daytime television drama that is credited by the Guinness Book of World Records as the longest-running American soap opera currently in production and the third longest running drama in television in American history after Guiding Light and As the World Turns....
, character Jasper JacksJasper JacksJasper "Jax" Jacks is a fictional character from the ABC soap opera General Hospital. He has been played by actor Ingo Rademacher from January 1996 to August 2000, and from August 2001 to July 2011. In January 2008, the role was temporarily filled by Gideon Emery...
is a corporate raider.