Another banner year for activism – with a few twists and turns
This article is the third in a three-part series. Click here to read Olshan’s review of activism in 2016 and Olshan’s views on the SEC’s universal proxy proposal.
We believe 2017 will be another banner year for activism, with a few twists and turns. While the number of activist situations in the US will parallel the number for 2016, we do not believe we will see the same high volume of activists jump right out of the gate as we have seen in prior years. We believe many activists will sit on the sidelines for a little longer, waiting until after US president-elect Donald Trump is inaugurated on January 20, in order to get a better sense of how his policies will affect corporate America and the financial markets.
We also believe many activists are uneasy with the torrid run-up in the markets since the election and would like to wait a little longer for a possible pullback in order to complete their acquisition of target shares prior to launching campaigns.
In the US, we believe activists will continue to set their sights on small to mid-cap targets and expect to see fewer higher-profile proxy fights against mega-cap companies making headlines. During the course of the next several months, activists will watch closely how Trump’s policies, especially his proposed deregulation and tax reforms, affect corporate balance sheets, M&A activity and corporate governance as they ferret out new targets and formulate their strategies.
New and interesting activist situations will flare up all over the world as activism goes global during 2017. We believe the number of activist campaigns outside the US will continue to steadily increase and receive more media attention than ever before. Countries such as Japan that are in the process of implementing sweeping corporate governance reforms could grab the attention of activists during 2017.
We believe the more experienced activists will take the lead in navigating the perceived legal and cultural challenges associated with these campaigns, which will embolden others to follow suit.
Finally, with the impending changing of the guard at the SEC, we believe there is a 50-50 chance that the proposed universal proxy rules will be enacted.
Ron Berenblat, Andrew Freedman and Steve Wolosky are members of Olshan Frome Wolosky’s activist & equity investment group