Hostile takeover attempts, whether or not successful, present the target corporation's leaders with a high potential for liability and few pleasant options. Although a number of federal securities laws have been enacted over the years to protect shareholders of the target corporation, these same laws also prohibit the use of deceptive or manipulative activities in devising defensive or preventive strategies designed to prevent an unwanted takeover.

A general requirement of conduct by a corporation's board of directors, including takeover defenses, is that the board act with care in an informed fashion only after a proper investigation and only when such actions are undertaken in the best interest of maximizing shareholder wealth. This requirement also may be expanded to include protecting the interests of employees and others. In many instances the courts have found that boards have acted without proper investigation and in a manner suggesting self-perpetuation. Directors also have been known to make hasty or imprudent decisions in the heat of the battle.