Stockholder activism strikes at the heart of a company's governance structure, often threatening the continuity of the board and management team. It's also been on the rise, particularly as the number of U.S. public companies has decreased over the last two decades. Many companies fear it, but you don't have to. In this primer, we explain common activist motivations and offer steps to determine whether your company might be a target. We also help prepare you in the event a stockholder activist takes a stake.
"Stockholder activism continues at historically high levels and affects publicly companies large and small," said Ed Batts, leader of Orrick's global M&A and Private Equity practice and author of the primer. "It stresses management teams and boards alike, as activists represent the most vocal manifestation of stockholder voices. This guide attempts to answer a host of questions on a broad area of activist topics."
The primer covers:
- A background on stockholder dynamics
- Who "activists" typically are, including economic activists and ESG activists, and how activists screen companies
- How economic activists accumulate their positions through stock ownership and/or derivatives and then surface in public, including the role of Hart-Scott-Rodino (HSR) and Schedule 13D
- A checklist for companies to prepare for an activist, including assembling the working group team
- Frequent activist objectives, how to respond to activists at the outset, and activist tools used as leverage as engagements progress
Orrick's global M&A and Private Equity group advises companies on strategic combinations, investments and day-to-day operations. We consistently place in the top 5 of Bloomberg's quarterly deal rankings as one of the top global teams.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.