Press releases

Activist Investors channelling 300 billion US dollars

6 December 2018

According to Deloitte, almost $300bn of holdings globally are being leveraged to achieve the demands of ‘activist’ investors. The firm’s latest report ‘Be Your Own Activist’, published today, also states a two-fold increase since 2014 in the number of large-cap (more than $10bn market capitalisation) companies being targeted by activists.

The new report analyses all public activist investments for global companies since 2014, together with activists’ accompanying demands. The report focuses on the top 100 activists whose primary or partial focus is on financial performance improvement to deliver returns to their own activist fund investors.

Commenting on the report’s findings, head of Value Creation Services at Deloitte, Jason Caulfield, said: “Global activism is rising and activists are putting their money where their mouth is, more than doubling (110% increase) the value of newly deployed funds in the last 12 months compared to 2014.

“Activists are better prepared than ever before. They spend considerable time undertaking sophisticated analysis to finesse their demand thesis and have stepped up their strategy by courting passive shareholders well in advance in order to influence crucial votes in their favour.”

The US remains the principal market for activist investors, however Deloitte analysis shows that the US share of the largest activists’ interest has fallen from almost 70% in 2014 to just over 50% in the last 12 months. In many other countries, such as Canada, the UK, Australia, Japan and China, more companies were targeted in the first nine months of 2018 than whole of 2017.

In the UK, campaign numbers in the last 12 months have surpassed the previous peak levels in 2016. Caulfield explains: “There are two trends working in parallel. On one hand, home-grown activists have emerged and are targeting local companies and at the same time, the US-based activists are also targeting global corporates, particularly in Europe where they account for 20% of total targeted companies.”

The report highlights the majority of activists’ demands are centred on Board representation followed by M&A, business strategy and operations, as well as capital allocation. However, only Board and governance related demands are successful more often than not. Caulfield explains: “Two thirds of the big activists’ demands are met with at least partial success or compromise. While many succeed in getting board representation, it is harder to get demands in M&A and business strategy through, not least because Boards are getting better prepared and are able to hold their ground.”

Caulfield concludes: “Activism is here to stay. CEOs and Boards need to think and act like activists to pre-empt and avoid costly showdowns. A rigorous self examination may lead to a different view of a company’s current positioning and of what it needs to do in order to improve focus, performance and returns to shareholders. Ultimately, by showing capability of acting on behalf of shareholders to achieve superior performance, corporate management may be able to succeed in pre empting activists.”

End

Note to editors

About the report
An ‘activist investor’ (or shareholder) is an individual or group that purchases/owns large numbers of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change within the company.

The Be Your Own Activist report is published by the Financial Advisory team at Deloitte. The three-part report is not about the merits or otherwise of activism.

Part One examines market trends in activism and what companies might expect from activists in the near term.

Part Two sets out the key points from discussions with former activists to get an insight into the activist mind-set.

Part Three aims to provide companies with suggestions about the means with which they might choose to prepare for – and pre empt – an activist campaign.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk.

Member of Deloitte Touche Tohmatsu Limited

Did you find this useful?