Guest post by Richard J. Grossman and Alexander J. Berg of Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates
Shareholder activism remains pervasive in the corporate landscape, as many companies continue to face new, and sometimes more sophisticated, activist situations. Recent activism-related trends indicate that the landscape is continually shifting, and companies’ strategies for dealing with activism should therefore also evolve and adapt.
Joseph W. Bartlett
A lively debate is cascading through the U.S. Capital Markets, triggered by the success of well-heeled investors in public markets labeled “activists.”
Bebchuk vs. Lipton
On the one hand, the applause in favor of activists is led by certain academics, the chief being Professor Lucien Bebchuk, who has reported.
“Empirical studies show that attacks on companies by activist hedge funds benefit, and do not have an adverse effect on, the targets over the five year period following the attack.
“Only anecdotal evidence and claimed real-world experience show that attacks on companies by activist hedge funds have an adverse effect on the targets and other companies that adjust management strategy to void attacks.
“Empirical studies are better than anecdotal evidence and real-world experience.
“Therefore, attacks by activist hedge funds should not be restrained but should be encouraged.”