HOW IT WORKS
The corporate raider requires a takeover vehicle to launch a hostile takeover. The takeover vehicle is usually another corporation controlled by the raider, although in recent years ESOPs have been used (e.g., Tribune Corp., 2007). The vehicle buys up a lot of shares of the target company's stock on the market, then announces it wants to acquire a controlling interest.
Management opposes the takeover bid. It can (a) challenge the legality of the takeover, (b) adopt a charter that makes it hard for the takeover vehicle to run the company it's proposing to buy (a poison pill), (c) seek another buyer that is more favorable (a white knight), or (d) borrow a ton of money and buy so many shares that the stock price goes up.
The raider makes a tender offer for the shares he doesn't own. At a certain point, he may acquire sufficient control that he can legally challenge the target's management to step down.
WHAT CAN GO WRONG
The management can use (a) or (b) successfully, or it can use (e), viz., launch a hostile takeover bid of the target vehicle. The raider can lose of lot of money if a lot of shareholders have accepted his tender offer.
Everything changed when Michael Milken revolutionized the junk bond market, allowing raiders to attempt deals that violated sound business judgment. The defeated company was compelled to pay for its own conquest.
Person 2: Hostile takeover, they swooped in and booted the old guys.