Activism Defense


Activists win nearly 60% of all proxy fights achieving outright victory, partial victory or settlement. Besides increased engagement, the response to activist activity by companies has not kept pace with the increasingly sophisticated tactics employed by activists today. While many companies have made affirmative strides toward their own self-analysis when engaged in activism defense, very few are employing heavily analytical communications strategies to deconstruct activists’ true track records and tell the world about it.

How do companies even the odds?

  • Analyze your business the same way activists will
  • Prepare an activism defense based on understanding and predicting the activist's approach
  • Create an internal and external team of “A” players
  • Track the stock performance of companies where the activist has been involved
  • Take actions that may mitigate potential activist arguments including:
    • Self-benchmark and scrub G&A and CapEx spending
    • Add qualified persons to the board, consider capital allocations changes
    • Take a critical look at CapEx
    • Anticipate responses to financial anomalies that will make you vulnerable to valid, and not-so-valid criticism
    • Analyze shareholder voting trends, relationships with proxy advisory firms and the proxy decision making process
    • Review historical proxy advisory firm analysis regarding dissidents and activism in the industry, including a review of all relevant ISS investor decks
How FTI Consulting Improves Your Defense

Without hyperbole, no other firm can combine world class analytical, operations and communications skills the way FTI Consulting does for activism defense.

  • FTI has the leading forensic accounting practice amongst its peers, and has worked on many high-profile litigations and activist and M&A defense matters, providing management and boards of directors with a critical advantage – objective analysis
  • FTI is one of the world’s largest crisis communications and investor relations firms both globally and by numbers – allowing us to work on multiple engagements in multiple jurisdictions
  • FTI has world class anti-trust expertise
  • FTI has consistently ranked number one in deal volume over the last 3 years
  • FTI is a top financial advisory firm, providing operational enhancement, SG&A reductions and CapEx analysis
  • FTI is ranked as the #1 restructuring firm in the world by The Deal which helps it understand the warning signs when activists are running a target company too close to the line in an effort to reap short term gain
When an Activist is on Your Doorstep

Even the best preparation cannot prevent activist aggression—but it can put a company in the best position to convey its message to the institutional community and to reduce the credibility of the activist.

  • Focus on Proper Messaging
  • Use messaging that directly addresses activists’ assertions—avoiding them gives investors the impression the activists are correct. Drive messaging that resonates with investors first and the media second.
    Behind the Headline: Insist on having all the data you need at hand to execute your responses. Prevent leaks.

  • Create Strong Shareholder Engagement
  • Engagement with shareholders needs to include the proxy-voting decision makers, which may not be the portfolio manager or analyst.
    Shareholder research—understand voting guidelines and preferred engagement processes and identify voting decision makers.
    Behind the Headline: Monitor all key influencers within your shareholder base plus sell-side analysts and bloggers. Have a plan for ISS and one for gaining institutional support

  • Use Media to Your Advantage
  • Leverage the traditional media and use digital assets (website and social media) to get the message out quickly—traditional media may tire of a story—use social media to reinvigorate the messaging.
    Create digital content and website to facilitate various stakeholder communications. Drive stakeholders to one source for information to control the message.

Capitalizing on an Activist’s True Track Record in Your Defense

Shareholders need to know if activist investors have protected shareholders from downside risk at companies they have targeted or acted recklessly and irresponsibly with little regard for rules in their quest for short term gains. Communications, operational analysis and analytics are your keys to changing the odds.

  • Beyond the Obvious: Understanding the Activist Beyond its Track Record
    • How have the companies with which the parties have previously been involved behaved on matters of governance?
    • Does an in-depth analysis of former targets reveal poor accounting or reporting practices?
    • Has the activist signed off on actions concerning management compensation or other “hot button” issues that conflict with its current statements?
    • Does a review of all historical proxy advisory firm analysis regarding dissidents, including a review of all relevant ISS investor decks, reveal any inconsistencies?
  • Beyond the Activist: Understand the Effects on the Company
    • How have companies successfully defended themselves against the activists?
    • Draw on techniques to keep management and the employee base focused on optimal execution and not the activist fight.
    • What actions can be taken to enhance free cash flow prior to the next reporting period?
    • What advisors can be retained to blunt the focus of the activist?
  • Beyond the Investors: Understanding the Effects on All Stakeholders
    • Which issues may cause the press and the government to take a negative view of the activist?
    • What were employee issues at prior targets?
    • Did a prior target have any business deals with unscrupulous entities or individuals—including suspect foreign governments?
    • Are there political considerations to take into account concerning the activists demands?
Notable Activism Defense Clients

  • Corpbanca
    Defended against an activist investor attempting to disrupt a merger
  • Transocean
    Transocean Ltd.
    Defended against an activist investor seeking board seats
  • Aeropostale
    Aeropostale, Inc.
    Defended against an activist investor seeking board seats
  • Bwin digital entertainment plc
    Defended against an activist investor seeking board seats
  • Innophos
    Innophos Holdings Inc.
    Defended against an activist investor
  • Financial Institutions, Inc.
    Represented company in an activism defense - referred in via Credit Suisse
  • Volt
    Represented company in activism defense
  • Superior Industries
    Superior Industries International, Inc.
    Represented company in activism defense
  • Allstate
    The Allstate Corporation
    Counseled company on how to oppose proposal to split the role of CEO and Chair
  • Shire
    Shire plc
    Represented acquirer in an unsolicited offer / preparation for meeting with large activist
  • Manitowoc
    Represented company in activism defense
  • DSM
    Royal DSM
    Represented company in activism defense
  • Everyware
    EveryWare Global, Inc.
    Board work led to an interim CEO engagement and an interim CIO advisory engagement
    EMCOR Group Inc.
    Defense against proxy access proposal
  • MSC
    MSC Industrial Supply Co.
    Analysis of vote for a shareholder proposal
  • Tangoe
    Tangoe, Inc.
    Counseled a company going through a restatement with an activist in their shareholder base
  • Perrigo
    Read More
    Defended company against hostile takeover attempt
  • Dupont
    Read More
    Activism defense support in successful proxy fight against Trian
  • Omega Protein
    Counseled management and board in an activism defense