A white knight is an acquirer of a business that keeps a hostile takeover from occurring. The business is still acquired, but the white knight is the favored suitor. Under this scenario, the white knight is topping the bid of the hostile suitor, so investors receive a higher return than would have otherwise been the case. Also, the existing management team generally remains in place, which might not have been the case if the hostile takeover had been completed.
The managers of a business that is subject to a hostile acquisition attempt frequently initiate the first contact with a white knight.