Welcome!

News Feed Item

Landmark Study From FTI Consulting and Activist Insight Finds Activist Investors Broadening Tactics and Geography

Survey of Leading Activist Investors Shows M&A Activism, Over All Other Types, Will Have Largest Increase in 2014 as Activists Look Beyond North America for Targets

LONDON, April 22, 2014 /PRNewswire/ -- FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organisations protect and enhance their enterprise value, released initial findings from its survey, The Shareholder Activists' View, which reveals that merger and acquisition ("M&A") activism is on the rise. The Strategic Communications segment at FTI Consulting conducted the study in partnership with Activist Insight, a global information source on activist investment. In-depth interviews were held among leading economic activist investors that have collectively engaged in more than 500 activist situations, with the primary goal of increased returns, to gauge their views on renewed areas of focus for shareholder activism in 2014.

Landmark Study From FTI Consulting and Activist Insight Finds Activist Investors Broadening Tactics and Geography

The shareholder activism landscape has changed dramatically over the last several years. According to data compiled by Hedge Fund Research, activist hedge funds managed over $93 billion dollars in 2013, almost triple the amount managed just five years ago, and an increase of 42 percent from an estimated $65 billion in 2012. This increase in investment has been fueled by returns of 16.6 percent in 2013, which far outpaced the average hedge fund, returning 9.3 percent. Further, the investors in these activist funds now include an increasing number of large pension funds and institutions – the same pension funds and institutions that have been increasingly supportive of activists with their votes. 

The increased returns and inflows of monies clearly show that activist funds as an asset class are not only here to stay, but are increasing their influence on M&A transactions. As these funds grow larger, they are able to target larger companies, doubling the amount of companies targeted with market caps greater than $2 billion in 2013. Using balance sheet and operational strategies, activists have not been deterred from engaging with well-known Fortune 100 and 500 companies.

In conducting this survey, FTI Consulting interviewed economic activists – activists whose primary goals are increased returns – what their thoughts were concerning the landscape for activism in 2014 and where they expect there to be increased or decreased activity in the market.     

M&A activism is a key theme

The results from the survey show that the overwhelming majority (89 percent) of activists believe that 2014 will see an overall increase in M&A activism. According to Dealogic, Global M&A volume reached $804.5 billion in the first quarter of 2014 compared to $655.8 billion in the first quarter of 2013, up 23 percent year-over-year, marking the highest first quarter volume since 2008.This emerging asset class could present significant challenges for the successful conclusion of transactions by employing investment strategies that target not just the target company, but also the acquirer.

"Especially interesting is the activists' willingness to engage on the acquirer side of a transaction. An acquirer will often use more aggressive balance sheet structures to execute M&A. An M&A activist may well look at this structure and the risk profile of the transaction and decide that that they like the Board's more aggressive balance sheet approach, but would like the cash returned rather than used for M&A. This type of activism will put more deals in jeopardy," commented Steven Balet, Managing Director and activism specialist in the Strategic Communications segment at FTI Consulting.

"While nearly three-quarters (73 percent) of activists polled say they would take a traditional route, investing in a target and then apply pressure to increase the offer price during transactions, a surprising 43 percent of activists interviewed stated they would look for opportunities to discourage the transaction and instead push the acquirer to unlock value through share buybacks, dividends and divestitures, rather than go through with the transaction," Mr. Balet added.   

Europe (more specifically the UK) is becoming a greater focus for U.S. activists

"Although the survey demonstrates that  a significant amount of activists (87 percent) see no shortage of targets in North America, 40 percent of activists are shifting their focus to Europe and elsewhere," said Edward Bridges, Senior Managing Director in the Strategic Communications segment and Head of the special situations team in the UK. "This shift corresponds to the increasing level of activist engagements the market has seen internationally particularly in the UK, where almost 50 percent of European activism takes place where corporate governance and legal frameworks are most activist-friendly. Hence, we have seen a sharp increase in corporate focus on activism defense planning, particularly as there has been real evidence of long-only institutions becoming more activist in their own right as well as implicitly and explicitly supporting activists' positions."

The survey also revealed that with respect to strategy, originating an activist position was not the sole basis for investment in a target company, as 69 percent of those surveyed support other activists by investing in previously commenced activist situations. In turn, upon public announcement of a campaign, an activist can normally count on a significant percentage of "follow on" shares being purchased therefore increasing their bargaining position, in effect, creating a larger voting bloc than is readily apparent from the activists' own share ownership filings.

Activism makes for great media copy and the impact of social media is proven

Media also continues to play an important role in activist engagements, with 88 percent of activists interviewed stating the media has positively impacted activism.

"Activism has gone mainstream and the media has become very supportive of activists who have become increasingly sophisticated in their engagements and in use of the media," stated Mr. Bridges.

While only one-quarter of those polled already use Twitter and other social media platforms when engaging in activist campaigns, the survey found that 69 percent expect an increase in use of social media in 2014.

Mr. Balet added, "When Icahn took an activist stake in Apple, he announced it via Twitter. The impact was immediate and moved the markets – it was a lesson that everyone in the activist community noted and one that is likely to be emulated. When considering pre-emptive activist defence planning, companies need to understand what social media strategies are available both in defence and offence."

The full survey findings from FTI Consulting will be released in May 2014. An infographic of the report, along with other insights on shareholder engagement and activism, can be accessed here: http://fticonsulting.com/activism.

Research Methodology

The Strategic Communications segment at FTI Consulting conducted in-depth interviews among economic activist investors – activists whose primary goals are increased returns – between March 1, 2014 and March 19, 2014. The survey sample consisted of activist funds that have been engaged in more than 500 activist situations since 2000.

About Activist Insight

Activist Insight (www.activistinsight.com) provides the most comprehensive global information source on activist investment. This includes live alerts on activist investments, over 200 detailed activist investor profiles, unique stats on activist campaigns and proxy battles, and much more. A free trial of the database and a monthly newsletter subscription is available on request.

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organisations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 4,200 employees located in 26 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. The Company generated $1.65 billion in revenues during fiscal year 2013. More information can be found at www.fticonsulting.com.

Investor Contact:
Mollie Hawkes
+1.617.747.1791
[email protected]

Media Contact:
Jessica Gill
+44.0.20.3727.1195
[email protected]

Photo- http://photos.prnewswire.com/prnh/20140408/NY99653-INFO

SOURCE FTI Consulting, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Developing software for the Internet of Things (IoT) comes with its own set of challenges. Security, privacy, and unified standards are a few key issues. In addition, each IoT product is comprised of (at least) three separate application components: the software embedded in the device, the back-end service, and the mobile application for the end user’s controls. Each component is developed by a different team, using different technologies and practices, and deployed to a different stack/target –...
What does it look like when you have access to cloud infrastructure and platform under the same roof? Let’s talk about the different layers of Technology as a Service: who cares, what runs where, and how does it all fit together. In his session at 18th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, an IBM company, spoke about the picture being painted by IBM Cloud and how the tools being crafted can help fill the gaps in your IT infrastructure.
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, discussed how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved efficienc...
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Complete Internet of Things (IoT) embedded device security is not just about the device but involves the entire product’s identity, data and control integrity, and services traversing the cloud. A device can no longer be looked at as an island; it is a part of a system. In fact, given the cross-domain interactions enabled by IoT it could be a part of many systems. Also, depending on where the device is deployed, for example, in the office building versus a factory floor or oil field, security ha...
Ask someone to architect an Internet of Things (IoT) solution and you are guaranteed to see a reference to the cloud. This would lead you to believe that IoT requires the cloud to exist. However, there are many IoT use cases where the cloud is not feasible or desirable. In his session at @ThingsExpo, Dave McCarthy, Director of Products at Bsquare Corporation, will discuss the strategies that exist to extend intelligence directly to IoT devices and sensors, freeing them from the constraints of ...
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
SYS-CON Events announced today that CDS Global Cloud, an Infrastructure as a Service provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. CDS Global Cloud is an IaaS (Infrastructure as a Service) provider specializing in solutions for e-commerce, internet gaming, online education and other internet applications. With a growing number of data centers and network points around the world, ...
Technology vendors and analysts are eager to paint a rosy picture of how wonderful IoT is and why your deployment will be great with the use of their products and services. While it is easy to showcase successful IoT solutions, identifying IoT systems that missed the mark or failed can often provide more in the way of key lessons learned. In his session at @ThingsExpo, Peter Vanderminden, Principal Industry Analyst for IoT & Digital Supply Chain to Flatiron Strategies, will focus on how IoT de...