By Michael Ferreter
Speaker: Christopher Drewry, Partner, Latham & Watkins LLP
Moderator: Dan Scorpio, Head of M&A and Activism, H/Advisors Abernathy
Presentation: Activists at the Doorstep: IRO Leadership in Preparation and Defense
KEY TAKEAWAYS
- Christopher Drewry and Dan Scorpio led an engaging review of how IR officers can prepare for and respond to activist investors, followed by a tabletop exercise simulating an activist attack. Scorpio began with an overview of the current activism landscape. He noted that 39% of companies are first-time activists, meaning there are a lot of new names out there for IROs to learn. Drewry reminded the audience that all activists are competing for assets under management (AUM) and outsized impact on the stock price.
- Factors that draw activist attention include poor performance versus peers, significant liquidity and a persuadable shareholder base. Companies also must be seen as not in a secular decline – in other words, that improvement can be achieved. Activists generally have a specific ask that can be from in a window from a few months to a few years. Public campaigns are a fraction of all activity in this space, and activists can front-run the green shoots of a company-led turnaround, Drewry noted.
- In the tabletop exercise, Drewry and Scorpio presented a scenario about a company approached by an activist and walked through how the situation can escalate. Tips for IR officers covered by the exercise included identifying the most vulnerable board members, having trusted advisors lined up before the first hint of trouble and preparing a plan to respond to the inevitable media leak.