January 12, 2022

M&A Activism: Sale-Oriented Activism on the Rise?

During the pandemic, most M&A activism has focused on opposing a pending deal or improving its terms, rather than pushing boards to seek a potential sale. This excerpt from this recent Insightia blog says there are signs that activists may shift gears in the upcoming year:

M&A activity sprinted through the fourth quarter and the turn of the year, with activist investors more determined than ever to capitalize. Based on recent reporting, event-driven activist Jana Partners – a semi-reliable barometer of hedge funds’ confidence in dealmaking – could pressure as many as seven companies to sell themselves or parts of themselves in the coming months.

A pro-M&A tilt from activists would signal progress from pandemic-era activism, which has been much more focused on stopping or improving deals that have been struck at low valuations. Yet throughout the past two years, there have been companies pushed into strategic reviews thanks to more sophisticated activist tactics including proxy fights and stalking horse bids. Whether activists take a surgical or broad approach to the M&A market depends on how many companies look vulnerable and how quickly the window for dealmaking is likely to remain open.

John Jenkins