What are activist investors? The term activist investor refers to shareholders of publicly traded companies who use direct engagement to pressure the board of directors to change the organisation’s strategy, bypassing the normal advisory process.
Today’s activists are not simply looking for an immediate release of value to shareholders but to improve corporate performance – a different approach to the same end. Board composition, tenure, diversity, skills, and experience can improve a board’s performance and now attract a lot of activist attention.
As Warren Buffet put it: “If every company were well managed, there would be no reason for activists. The truth is, at some companies, the managers forget who they’re working for.
Many organisations in 2021 will face activist targeting and proactive measures can remedy vulnerabilities or issues. To prevent unwanted probing, corporations must proactively and thoughtfully message to the overall health and viability of the business, addressing liquidity concerns, what the company is doing to give back to the community, and the company’s long-term strengths and potential opportunities.
As long as it is scrupulous, a strong central message can ward off activist investment.