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Are You Ready for Some Activism?

A few months ago, the Ipreo Blog wrote about The Evolution of Investor Activism. Specifically, we covered the ways activism has changed over the past few years, and how, recently, activist campaigns have been more frequent. Today, we’re digging a little deeper and exploring what the changing landscape means for IROs and their companies, and what they can do to stay prepared, in case their own shareholders start making waves.

Back in September, we discussed the misconceptions many have about the types of companies activists target, as well as the types of companies activists actually pursue and pointed out the recent, steady rise of activist campaigns, which have grown by over 160% since 2009. Based on our data from the first half of 2014, the trend is showing no signs of slowing down.

As one IRO mentioned to Ipreo, “Activism is going to continue, because it works. Even non-activist
shareholders appreciate these guys rattling things up to a certain extent, because they usually have decent success in raising the price of the stock. Non-activist shareholders are taking a closer look at the points these activist shareholders are making.”

No, shareholder activism isn’t going anywhere, not anytime soon. Which makes it more important than ever that investor relations officers stay informed of activist trends, and take precautions in the event of activist engagement. But are they?

Recently, Ipreo’s Global Markets Intelligence and Perception Analytics groups surveyed more than 125 investor relations professionals and conducted comprehensive follow-up interviews with various IROs who have experience dealing with shareholder activism. Surprisingly, we learned that despite the fact that the first half of 2014 alone accounts for 25% of the aforementioned 160% growth in activism over the past five years, many – if not most – companies remain unprepared.

In fact, one key finding from our latest Special Report – Activism, Ready Or Not: How IROs are preparing for Activist Shareholders – indicates that despite most IROs acknowledging the ongoing trend of activism, few of them consider the potential for their company to be targeted. It might be time to rethink that approach.

“At some point, if you’re a major firm, you are going to see some activism in your stock,” explains one IR professional, “So whether or not firms believe they are a target of activism, they should have a response process as a part of normal IR.”

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