Investors Spill the Tea on What Makes Activists Come Knocking

A new study from SquareWell Partners shows that most investors think shaky governance is basically hanging a "come on in" sign for activist investors. A staggering 84% of them point to poor governance as the main thing that catches an activist's eye.

The study worked with investors from all over - North America, Europe, Asia - and most of them (about 77%) actually think activism is pretty useful. It shakes things up and keeps companies on their toes. But they're not completely sold either - 65% worry activists sometimes miss the forest for the trees.

Here's a juicy tidbit: 68% of investors admitted they've kicked themselves for not backing an activist campaign in the past. When it comes to what kind of activism they're into, they're big fans of governance and management shake-ups (71%) rather than operational tweaks or merger stuff.

What makes investors take an activist seriously? Strong arguments top the list (87%), followed by their track record (71%). And decision-making is often a team sport - sometimes it's fund managers calling the shots, sometimes it's the stewardship folks, but nearly half the time they put their heads together.

About half of investors are cool with talking to activists before things get public and just over half chat with other investors during campaigns. Same number would consider publicly backing an activist - which is pretty brave!

SquareWell's Will Samuels points out something smart: just because investors don't back an activist proposal doesn't mean they think everything's peachy keen. They might still be wondering about those same issues.

And the moral of our story? Don't wait until the wolf is huffing and puffing - build your governance house with bricks before the activists come calling!

#activism