Pyrrhic Victory

DEFINITION of 'Pyrrhic Victory'

Pyrrhic victory is a victory or success that comes at the expense of great losses or costs. In business, examples of such a victory could be succeeding at a hostile takeover bid or winning a lengthy and expensive lawsuit. The expression alludes to the Greek King Pyrrhus who, after defeating the Romans in battle, stated: "If we win another such battle against the Romans, we will be completely lost."

BREAKING DOWN 'Pyrrhic Victory'

In the business world, Pyrrhic victories often occur in the courtroom as a judge finds in favor with one side but the cost of bringing the case far exceeds monetary rewards. The escalation of the buyout price to execute a hostile takeover, followed by disappointing returns from the acquired company, is another example of a pyrrhic victory. In 2001, Microsoft won a Pyrrhic victory in its antitrust case when the appeals court decided the software giant was not to be broken up. However, Microsoft was still branded a monopoly and was subject to other punishment.

A Pyrrhic Victory in Court

In 2011, Hank Greenberg, formerly the CEO of American International Group Inc., filed a lawsuit against the U.S. government on the basis that the terms of the government's bailout of his insurance company were more harsh than those imposed on other financial institutions after the financial crisis of 2007-2008.

After four years, during which Greenberg is estimated to have spent millions of dollars on legal fees, the judge agreed with Greenberg's premise but did not award monetary compensation. While the court found the terms of AIG's bailout were more stringent than those placed on other financial institutions, the judge stated that, without the bailout, the insurance company would have been shut down. The result was Greenberg spent millions, got the victory and walked away with nothing.

A Pyrrhic Victory in a Hostile Takeover

When AOL took over Time Warner Inc. in a hostile takeover valued at $164 billion in 1999, the acquisition was hailed by AOL as the deal of the millennium. Shortly after the deal closed, however, the tech bubble burst, and the combined companies lost $200 billion in market cap over the following two years. Revenues were also squeezed by the rise of broadband Internet, which delivered far better performance than AOL's dial-up services. After 10 years of trying to synchronize the operations of the two distinctly different companies, AOL spun off its Time Warner holdings in 2009, ending a marriage referred to as one of the worst mergers of all time.

RELATED TERMS
  1. Hostile Bid

    A specific type of takeover bid that is presented directly to ...
  2. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  3. "Just Say No" Defense

    A strategy used by corporations to discourage hostile takeovers ...
  4. Busted Takeover

    A highly leveraged corporate buyout that is contingent upon the ...
  5. Scorched Earth Policy

    A takeover prevention strategy in which the target company seeks ...
  6. Anti-Takeover Statute

    A set of state regulations that prevent or deter companies from ...
Related Articles
  1. Managing Wealth

    Victory Capital: Investment Manager Highlight (KEY)

    Read about Victory Capital Asset Management, a conglomeration-style asset manager that acts as an umbrella operation for nine separate investment teams.
  2. ETFs & Mutual Funds

    The Top 5 Victory Funds for Retirement Diversification in 2016

    Discover the top five victory funds for retirement diversification in 2016, with a brief summary and key performance statistics for each fund.
  3. Investing

    Hostile Takeover

    A hostile takeovers is an unfriendly acquisition attempt by a company or raider that is strongly resisted by the management and the board of directors of the target firm. Learn more about the ...
  4. Investing

    What is a Takeover?

    A takeover happens when one company makes a bid to acquire a target company.
  5. Investing

    Warding Off Hostile Takeovers

    The purpose of this article is to provide a general overview of hostile corporate takeovers, while highlighting a general course of action against such activity. This article provides basic information ...
  6. Investing

    The Biggest Mergers & Acquisitions In The U.S.

    M&A is a daily part of the American business world. They're based on the principle that "One plus one equals three," i.e. they become greater than the sum of their parts.
  7. Trading

    Pinpoint Takeovers First

    Use these seven steps to discover a takeover before the rest of the market catches on.
  8. Investing

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  9. ETFs & Mutual Funds

    CDC vs. DLN: Comparing Dividend-Oriented ETFs

    Take a look at an overview and comparison of two dividend-oriented ETFs to learn the respective advantages and disadvantages of each fund.
  10. Investing

    How Mergers and Acquisitions Can Affect A Company

    M&A can have a profound effect on a company’s growth prospects and outlook, but with a significant degree of risk.
RELATED FAQS
  1. Which two companies underwent the biggest corporate merger of the 1990s?

    While the 1980s on Wall Street were typified by Leveraged Buyouts (LBOs) and hostile takeovers, the 1990s were the decade ... Read Answer >>
  2. What happens to the shares of a company that has been the object of a hostile takeover?

    Learn about the effect on the share price of companies that are targets of hostile takeovers, which are tactics used by famed ... Read Answer >>
  3. What's the difference between a merger and a hostile takeover?

    Understand the difference between a merger and a hostile takeover, including the different ways one company can acquire another, ... Read Answer >>
  4. How can a company resist a hostile takeover?

    Learn about some of the defense strategies a public company's board of directors might employ to prevent a hostile bidder ... Read Answer >>
  5. How can a company buy back shares to fend off a hostile takeover?

    Learn about why a business might use a stock buyback to thwart a hostile takeover attempt by reducing its total assets and ... Read Answer >>
  6. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Learn why it may often be in the best interest of a shareholder to accept a tender offer made at a premium to the market ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center