As shareholder activism continues to evolve, it presents new challenges and new threats to public companies. Being prepared is essential for management teams and company directors. Edelman helps clients prepare for possible activist approaches and crafts communications strategies to mitigate the risks.
Edelman works with clients to identify potential vulnerabilities that can attract the attention or scrutiny of an activist investor. This includes assessing a company’s investment thesis and capital structure in relation to alternative structures and peer companies. This also includes examining a company’s corporate governance profile for potential weaknesses that may be targeted by an investor or a proxy advisory service. We can also advise clients on the best way to improve governance to secure a positive response from both investors and the media.
Once a potential activist is identified as a possible holder, we provide detailed guidance on how to plan for first engagement. We provide comprehensive playbooks that describe the activist’s historical tactics and patterns, which provides immediate insight into how the activist may approach the company. We then work with the client and its advisors to develop scenario planning for a first approach as well as possible subsequent scenarios.
A company’s susceptibility to activist attack is in large part a function of the quality of relationships and interaction the company maintains with its investors. Edelman aids clients in reassessing and strengthening their IR programs to ensure a healthy dialog with investors and a clear articulation of the company’s business strategy and how it will maximize value for all investors. We then help our clients construct or renew IR and media tactics that support the overall IR campaign.
Activist attacks and contested shareholder votes challenge corporate governance, leadership structure and long-term business strategy. Once an activist investor threatens a fight or highlights a corporate governance weakness, directors and management will find themselves fighting a barrage of negative attention and publicity. Edelman works closely with its clients’ financial advisors to mount an appropriately calibrated communications campaign to defend against and overcome the activist’s threats. Our specialized team develops campaign strategy, writes content, advises on stakeholder communications, coordinates logistics for investor communications and manages media relations and outreach.