What is Lady Macbeth Strategy?

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 Does Lady Macbeth Strategy Work?

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 Does Lady Macbeth Strategy Matter?

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.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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