Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Lady Macbeth Strategy

What it is:

A Lady Macbeth strategy is a merger strategy in which a company betrays a target company by first appearing as a friendly alternative to an unfriendly acquirer and then later joining forces with the unfriendly acquirer.

How it works (Example):

Lady Macbeth is a character from Shakespeare's famous play Macbeth. By appearing to the King of Scotland as loyal and trustworthy, she creates a plan for her husband to kill him. Her false loyalty is what makes her plan work.

Accordingly, let's say Company ABC makes an offer to buy Company XYZ. Company XYZ does not want to sell to Company ABC and starts seeking other bidders. Company 123 comes forward as a potential buyer and appears much more willing to work with Company XYZ's terms for a sale. The two companies agree on a price and terms, at which point Company 123 turns around and brings Company ABC into the deal by obtaining funding from it.

Why it Matters:

Lady Macbeth strategies involve gaining a company's trust (and possibly additional information) in order to help or join other acquirers in buying the company. The strategy is generally disloyal and deceitful.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...