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
Silver Spring Networks, Inc. (NYSE: SSNI) extended its Internet of Things technology platform with performance enhancements to Gen5 – its fifth generation critical infrastructure networking platform. Already delivering nearly 23 million devices on five continents as one of the leading networking providers in the market, Silver Spring announced it is doubling the maximum speed of its Gen5 network to up to 2.4 Mbps, increasing computational performance by 10x, supporting simultaneous mesh communic...
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, will discuss using predictive analytics to ...
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, will discuss 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 effi...
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
As someone who has been dedicated to automation and Application Release Automation (ARA) technology for almost six years now, one of the most common questions I get asked regards Platform-as-a-Service (PaaS). Specifically, people want to know whether release automation is still needed when a PaaS is in place, and why. Isn't that what a PaaS provides? A solution to the deployment and runtime challenges of an application? Why would anyone using a PaaS then need an automation engine with workflow ...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
The cloud competition for database hosts is fierce. How do you evaluate a cloud provider for your database platform? In his session at 18th Cloud Expo, Chris Presley, a Solutions Architect at Pythian, will give users a checklist of considerations when choosing a provider. Chris Presley is a Solutions Architect at Pythian. He loves order – making him a premier Microsoft SQL Server expert. Not only has he programmed and administered SQL Server, but he has also shared his expertise and passion w...