Actionable Ideas for Companies and Sponsors

Corporate Boards Should Prepare for Resurgence in Activism

As market volatility normalizes and the economy begins to reopen, we expect activism activity to rise. Activists ended 2019 with over $130 billion in capital, a high watermark, and that dry powder needs to be put to work. In addition, a rebound in activism should be bolstered by the natural seasonality of activist campaign activity. This is because most U.S. corporations hold their annual shareholder meetings in the spring, most director nomination windows open in the December-February period, and activists historically begin the process of stake accumulation and private engagement post Labor Day. Finally, we expect activists initially to launch campaigns focused on operational and ESG issues to be followed by more traditional balance sheet and M&A campaigns.

Companies should be educating their Boards on the current activist landscape and to ensure there is alignment in the boardroom on prominent issues regarding ESG, corporate strategy, and company valuation prior to any activist approach.