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.

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