Shareholder Activism in M&A: Anticipating and Responding to Activist Attacks to Avoid Delayed or Derailed Deals

Description

Despite the recent drop-off in M&A activity, the share of activist campaigns urging strategic transactions has remained at historical levels. Shareholder activism has become part of the corporate landscape, and companies, regardless of their size, need to be prepared to respond and defend against attacks from hostile M&A bidders and activist shareholders. Further, the adoption of the universal proxy rules--which went into effect on Sept. 1, 2022--represents the most important development in shareholder voting in a generation and is already reshaping the activist playbook.

When it comes to M&A, shareholder activism can play a significant role in shaping the outcome of a deal. Specifically, such activism can impact corporate governance, deal evaluation, negotiation of deal terms, voting power, legal actions, post-merger integration, and other critical aspects of the deal.

To prevent deals from becoming delayed or derailed by activist shareholders, counsel for M&A buyers and target companies must guide their clients in implementing early strategic measures to anticipate and respond to challenges. Such efforts should include identifying vulnerabilities in the transaction that activists could attack and carefully crafting deal terms to increase the chance of approval by shareholders. Also, counsel should be concerned with how risks are allocated in the deal.

Listen as our authoritative panel discusses recent trends in shareholder activism in M&A transactions and best practices for anticipating and responding to shareholder challenges.