Company Corporate Money Takeover Buys Raids Bond Businesses

A "corporate raid" is an "aggressive" (forceful and not timid) strategy that businesses use to "get rid of" (eliminate) their competition. In a normal hostile takeover, Company A buys Company B and then operates it as part of Company A. "In contrast" (showing the difference between two things), a corporate raid is a type of hostile takeover in which Company A buys Company B, but then sells Company B's "assets" (anything that has value and can be sold). When this happens, Company A has one fewer "competitor" (a company that another company has to fight against for customers and profits). Corporate raids work well when Company B has many assets but a very low stock price.

Corporate raids were "at their height" (at a maximum and extremely common) in the 1970s and 1980s. "A handful of" (a few) investors became very good at buying other companies and selling their assets. One of the ways that they did this was through the use of "junk bonds." A "bond" is a piece of paper that one buys for a certain amount of money and then, one year or more in the future, gets that money back, plus some additional money. Companies "issue" (give out) bonds as a way to get people to lend money to them. A "junk bond" is a bond that has a very high "yield" (financial return, the amount of interest that can be earned on an investment), but is also very risky. The person who holds a junk bond might not get their money back if the company that issued the bond does poorly.

Many people believe that corporate raids and the use of junk bonds are unfair, because they close businesses and cause "unemployment" (not enough jobs for everyone who wants to work).