Trends in activist investing: what business leaders should know

During a recent panel discussion held at the Turnaround Management Association HQ in New York, Lisa Donahue shared her perspectives on how to handle an activist situation. Other panelists included Jenna Levine (Wachtell Lipton), Jay Goffman (Skadden), Dennis Dunne (Milbank), Bill Derrough (Moelis) and Alan Carr (Drivetrain Advisors), the session was moderated by Judge Kevin Carey.

A record-breaking number of activist campaigns have been announced this year, with a 10% increase from the same period in 2017 reported globally.

No company is immune, irrespective of size or location. 

This upward trend has seen the emergence of a ‘new world’ of investment strategy and investor-issuer relations. But the question still remains, what is the new normal in today’s fast-paced economy?

Key takeaways include:

Engage. While the first response may be to bury one’s head in the sand, it’s important to be responsive, develop a clear message and seek support. All relevant stakeholders should be communicated in a timely fashion. 

Diversify perspectives. Groupthink can lead to a myopic perspective, which could be the root cause of the problems and an inability to think strategically in the first place. 

Simplify. A cohesive approach is crucial. Rather than focusing on 40 different things, pick two to three at most five core issues and focus the efforts there to identify a course of action. 

Focus on delivery. It’s understandably a difficult period and hard to not take things personally, but focusing solely on the deliverables in the business plan will bring some structure and a sense of purpose. 

Implement a strict crisis comms plan. Limit the number of spokespeople communicating externally to keep the message under control.