Sun, Aug 14, 2022
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Tech CEOs go on the defense against activists

Friday, February 26, 2016

Bailey McCann, Opalesque New York:

Technology companies have been a target for activist investors in recent years. As the growth drivers in technology change, businesses have adapted and that doesn't always equate with immediate shareholder value. This makes companies ripe for activist actions, and according to a new report from Boston Consulting Group - that's not always a bad thing. Researchers suggest that CEOs have absorbed this signal and should now think like an activist in order to create stronger companies.

BCG has identified a set of financial indicators that together signal the likelihood that a tech company will be targeted. The most common activist "flags" are low (or no) dividend payouts (characteristic among 89% of the companies BCG studied), high capital spending (in place at 63% of the companies), and low return on capital (present at 57% of the companies) -- characteristics that are traditionally found in slow-growth industrial companies. Other flags include low levels of debt on the balance sheet and high SG&A expenses.

The more of these flags that are present, the greater the likelihood of being targeted, according to the report. But assessing a company's vulnerability to activist overtures is just the first step.

Report authors suggest that CEOs will want to rally investor support and be unafraid to make bold moves in order to keep costs down if they want to avoid activists. By taking on this view, companies will emerge stronger ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: ESG exuberance is at all-time highs. But will investors buy?[more]

    As investors increase their focus on mission-based investing, they continue to grapple with ESG and what it means to them. By David Shalom, Director of Capital Introductions at Pershing Innovation. New investment solutions. That's how managers deliver value and attract new inve

  2. Alts managers sitting on over $2.5tn+ of dry powder[more]

    Laxman Pai, Opalesque Asia: In the current rising interest rate environment, investment activity in the private markets has continued to grow, revealed a study. "With alts managers sitting on over $2.5T+ of dry powder and continuing to enjoy premium valuations and interest rates on a prec

  3. Opalesque Exclusive: Hong Kong manager expects additional tailwind in Asian markets[more]

    B. G., Opalesque Geneva: The Asia equity markets have not been at their best so far this year, with the MSCI Asia index down almost 13% YTD, but many managers remain buoyant about the region, as in

  4. Opalesque Exclusive: Emerging markets persist despite headwinds[more]

    Bailey McCann, Opalesque New York: Emerging markets have been under significant pressure since the start of the year, but there are some nascent trends that suggest that things could be getting better. Emerging markets firm Gramercy Fund Management recently released its third quarter outlook and

  5. Opalesque Exclusive: Castle Hall's DiligenceExchange free Transparency Reports cover 100 managers with $10tn of assets[more]

    Matthias Knab, Opalesque for New Managers: Managers and investors can get free access to DiligenceExchange here: https://bit.ly/DXCInfo Castle Hall, the Du