MIAMI: Corporate communicators should prepare for an increase in shareholder activism this year as more activists target large companies, said executives during a panel discussion at the ICR XChange conference in Miami.
Speakers at the “Corporate Governance & Shareholder Activism” panel on Wednesday predicted a spike in shareholder activism this year as M&A markets improve and activists with more money set their eyes on bigger targets.
Companies are also seeing a shift toward more “operational activism” in which shareholders attempt to influence organizational strategy and management rather than just the balance sheet, said Marc Weingarten, partner and chair of the business transactions group at law firm Schulte Roth & Zabel.
“Companies are freaked,” Weingarten told PRWeek, adding that he had seen more first-time activists jumping into the space after witnessing the success of other activist campaigns.
Panelists said the No. 1 strategy for dealing with activist shareholders is effective communications with stakeholders. They advised companies not to put off communications until after an activist has emerged.
“A company will find itself in a tough spot if it's just reacting to the activist,” Weingarten said.
The first step in preparing for shareholder activism is assembling an experienced team, said ICR MD Phil Denning. That team should consist of attorneys with expertise in the space, not just existing general counsel for the company, along with communications advisers, he explained.
Companies should also respond quickly when an activist arises, panelists advised. They should then maintain dialogue through shareholder meetings, media engagement, and communicating with proxy advisers.