Poison pills have proven highly effective as deterrents. According to studies, companies with poison pills are significantly less likely to receive hostile takeover bids. However, they don't guarantee protection, as determined acquirers may still attempt negotiations or proxy fights.

Key drawbacks include: potential negative impact on stock price, reduced market liquidity, criticism from shareholder rights advocates, and possible deterrence of friendly acquisition offers. Some institutional investors view poison pills unfavorably and may reduce their holdings.

Yes, poison pills can face legal challenges, particularly regarding the board's fiduciary duties. However, courts generally uphold properly structured poison pills under the business judgment rule, provided they serve a legitimate corporate purpose and are not primarily aimed at entrenching management.