An
antitakeover measure in which a company
sells many or all of its "good" or desirable
assets and/or issues an extraordinary amount of
debt. A scorched earth policy is designed to make the company less attractive to potential
acquirers. The obvious disadvantage to a scorched earth policy is the possibility that, even if the company remains independent, it may have acquired so many liabilities that it may not be able to maintain its operations easily. See also:
Poison pill,
Suicide pill.