Corporate Raiding

CORPORATE RAIDING refers to two different types of behavior. The first is the situation in which[Page 216] a company hires away employees of interest from a competing company. Typically, the hiring company is interested in the knowledge and proprietary information that the employee has about the products, and/or financial situation of the company they are leaving. For example, Company A is a software development company, which approaches Mr. G who is a software writer for Company B, a competing software development firm. Company A agrees to pay Mr. G twice is salary at company B if he will move his projects to Company A. While not criminally illegal, this type of corporate raiding may be considered immoral or unethical, as well as civilly liable behavior. News reports suggest that this type of corporate raiding is becoming more common as companies seek newer and better products to boost lagging corporate profits.

The second type of corporate raiding was very popular in the 1980s and 1990s era of corporate mergers and acquisitions. This type of corporate raiding involved investors buying controlling interest in corporations. The raid could constitute a friendly takeover, in which the officers and board of the raided corporation agreed to the merger. The other type of raid was called a hostile takeover, in which the officers and board of the raided corporation would fight the takeover.