what is a kamikaze defense 
a kamikaze defense is a defensive strategy sometimes resorted to by a company s management to prevent a takeover by another company while these strategies are named after the suicidal kamikaze attacks used by japanese pilots during world war ii they rarely destroy the company nevertheless a kamikaze defense involves taking measures that are detrimental to the firm s business operations or financial condition the idea is to reduce the target company s attractiveness to a hostile bidder a kamikaze defense is desperate but the hope is that the takeover bid will be thwarted understanding kamikaze defensesa company where management does not want it to fall into another group s hands may try a kamikaze defense as a last resort in an intended acquisition process an interested party will usually build up a small stake in the target company and approach the board of directors with an offer to buy the company suppose the board rebuffs the offer which would invariably be the case if the board and its financial advisors believed that the offer substantially undervalued the company then the interested party could assume a more aggressive stance to take over the company suppose the would be acquirers feel like they are getting nowhere with more pressing negotiations in that case they may attempt a hostile takeover against the board s wishes in response the target company could seek out a white knight this friendly party would generally hold together the current business operations of the company existing management would usually prefer that rather than disrupting or dismantling their company which is often the end result of a successful hostile takeover another takeover defense mechanism is the adoption of a poison pill that is generally considered a shareholder unfriendly move but it is mild in comparison to full kamikaze strategies a kamikaze defense may succeed in the end but the company would leave itself in a weakened state kamikaze defenses are often undertaken by management to protect their own interests or at the behest of the company s founders and their heirs kamikaze defenses rarely work to the benefit of ordinary shareholders types of kamikaze defensesthere are several different ways that companies can make themselves less attractive takeover targets usually at considerable cost to themselves 