The number of U.S. based companies subjected to investor activists demands rose to a high in 2018, only to fall slightly in Q1 of this year, according to Activist Insights
Investor activists buy sizeable numbers of shares, often also trying to gain seats on company’s board, to create change within a company. The impetus for altering a company can come from many places, including the belief that a company is mismanaged, it has too many costs, it could be better suited as a private company, or any other issues that an investor believes could be fixed to make it more valuable. Many activist investors target companies that they view as large and filled with inefficiencies. Whole Foods acquisition by Amazon
was pushed along by activist investor, Jana.
Over the past two years, activist demands have increased and 2019’s first quarter numbers indicate that this trend is stabilizing but will continue. Many companies in the U.S. are wising up to how to handle this group of investors, with advisors and consultancies coming into the space.
While investor activist campaigns started in the U.S., the practice is spreading to parts of Europe, with German regulators allowing investors more access to boards. The U.K. saw the most activist investor demands in the first quarter of this year, while Portugal and Russia registered their first set of activist demands this year.