DealLawyers.com Blog

M&A-centered activism surged during the second half of 2025 and is expected to continue to rise during the current year.  This Paul Weiss memo discusses M&A activism and offers some insights into how companies should prepare for it.  This excerpt discusses how activists are likely to pursue M&A-centered campaigns in the coming months:

– Pushing for a strategic review at companies that are potential buyout targets. Small- and mid-cap public companies with strong cash flow could become targets for activists as private equity sponsors look to deploy dry powder. Companies operating in sectors that have been overlooked by the AI boom but otherwise have strong fundamentals may be particularly attractive given their relative valuation.

– Teaming up with sponsors to push for a sale. The line between private equity and activists often blurs during periods of robust dealmaking, and the coming months could signal a gradual return of private equity cooperation and teaming up with activists to put companies in play. Activists may also seek to broker deals by identifying potential targets for sponsors.

– Inserting themselves in strategically transformative transactions. Activists may seek to gain influence within companies rumored to be exploring a potential transaction in order to increase the odds of such a transaction being consummated. Such actions may include seeking access to information or nominating directors to the board.

– Opposing announced M&A and/or engaging in bumpitrage. Where announced transactions fail to meet market expectations (or in many cases, the activist’s expectations), activists may agitate against the transaction, or alternatively, urge the parties to revise the transaction terms in order to make a quick and outsized return.

– Pushing for break-ups and divestitures. Portfolio simplification will likely continue to be a priority for activists, as investors reward focused portfolios and easily understandable strategies. We expect companies with disparate or underperforming segments to continue to face activist pressure to simplify their operations through M&A.

The memo also highlights some of the unique challenges companies face in responding to M&A activism, most notably the greater legal constraints and heightened market scrutiny that accompanies M&A-related conversations, and it offers some advice on navigating these challenges.

– John Jenkins