Definition - What does Black Knight mean?
A black knight can be defined as a hostile takeover in which an unwelcomed firm pursues a bid for the acquisition of another business by offering to purchase a large number of shares in order to gain control of the target company. Black knights target companies that are viewed as undervalued.
Divestopedia explains Black Knight
In most black knight hostile takeovers, the end goal is to make a profit. Black knights muscle their way into the bidding process for firms that are viewed as potentially valuable. This value is determined by the target company's assets, which once acquired, can be dismantled and sold to interested buyers.
The term black knight is more commonly used in the public markets rather than the private markets. A private middle market company that is approached by an undesirable acquiror will simply not pursue the transaction and will not be subject to the threat of a public market takeover or stock purchase.