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Alternative Market Briefing

Other Voices: Shareholder activism trends in the 2019 proxy season

Wednesday, April 24, 2019

By: Skadden, Arps, Slate, Meagher & Flom,

In 2018, robust U.S. and global M&A activity substantially mitigated the downside risk for activist investors. With political uncertainty ahead of the 2020 presidential election, unsettled questions on trade and tariffs, and the late 2018 market correction potentially foreshadowing a downturn, how activist shareholders respond to a changing landscape in 2019 remains to be seen. Regardless of what happens with the economy and other factors in 2019, recent trends in the industry indicate there are various ways companies and boards can expect to engage with activist investors.

Trends to Watch

Private Equity Approach. A key trend to watch in 2019 is the blurring of the lines between traditional shareholder activism - where investors, typically hedge funds, take an ownership position in a public company and seek to effect material change by utilizing various tactics including proxy contests, stockholder proposals, and public and private agitation - and private equity transactions, where investment firms aim to acquire or take a significant position in private companies (or public companies that they seek to take private) with the goal of exiting in the future at a higher price. Over the past few years, activist investor Elliott Management has engaged in a more traditional private equity strategy, including its acquisition of Gigamon in 2017; its purchase, with Veritas, of Athenahealth in November 2018; and most rec......................

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