Corporate Insights Shareholder Activism:
an evolving challenge

Shareholder Activism:
an evolving challenge

(4th Quarter 2019)

Themes

  • A new paradigm in shareholder activism
  • The landscape has expanded… what are activists looking for today? 
  • Do activists really increase shareholder value?

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Introduction

Shareholder activism has been a highly visible feature of the global capital markets for the last several years. Prominent activist investors continue to make headlines with campaigns against some of the world's biggest companies. But now, beyond these powerful players, lies a rapidly growing set of investors, who are becoming "active" by taking stakes in companies and making demands of management and boards across the globe.

Shareholder activism is a developing industry that continues to evolve. Five years ago, activists were commonly viewed with a strong negative connotation – often dubbed as opportunistic 'corporate raiders' – reputed for making hostile takeovers for their own short-term personal gain, in potentially value-destroying ways for the companies they targeted. Today, we believe it is too simplistic to think of activism as an ominous 'threat' of predatory investors that corporates need to prepare to 'battle'. Rather, what it means to be an activist is much more nuanced in today's landscape.

So how exactly has the landscape shifted, what are these investors looking for, do their evolving tactics actually work, and what should corporate leaders consider in order to prepare? In this edition of Credit Suisse Corporate Insights, we explore how the activism environment has changed, what makes a company vulnerable today, and whether activists' claims about generating "alpha" are substantiated – all in an effort to better understand what corporate decision makers should do in order to prepare and respond to shareholder activism.