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Marc Weingarten, Schulte Roth & Zabel

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Stakeholders more accepting of shareholder activism, says report

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Acceptance and support for shareholder activism continues to increase across all constituencies, according to a report from law firm Schulte Roth & Zabel (SRZ), published in association with FTI Consulting.

The 2016 Shareholder Activism Report reveals that 92 per cent of those surveyed believe institutional investors are more accepting of activists than in previous years, with activists also experiencing increased receptivity from retail investors, boards of directors, management teams and the media.
 
According to the report, 84 per cent of respondents see some or a lot of opportunity for activism in the UK, compared to 74 per cent for the rest of Europe, and 19 per cent of activists see no opportunity in Asia, while 66 per cent of activists feel companies should enter into an active dialogue with investors as an effective defensive tactic.
 
The median length of time respondents hold their activist investments meanwhile, is three years and they target a median alpha-adjusted annual return of 20 per cent on activist investments.
 
SRZ partners Marc Weingarten (pictured) and Eleazer Klein serve as co-heads of the firm's global shareholder activism group, which also includes London-based corporate and funds partner Jim McNally and New York-based litigation partner Michael E. Swartz.
 
Weingarten says: "More directors with an owner's perspective are still needed in many boardrooms, to respond to the increasing acceptance of shareholder activism."
 
The report discusses the difficulty activist investors face in reaching resolutions with management teams.
 
Klein says: "Settlements continue to be the trend, but the tides may be changing."
 
The report is based on a survey sample consisting of economic activist funds, with combined assets under man­agement of USD153 billion, that have engaged over 420 companies in activist campaigns since 2010 including some of the largest and most high-profile situations.
 
The surveys were sent out immediately after the Brexit vote.
 
Josh Black, editor-in-chief of Activist Insight, says: "It appears activists have every intention of being as busy next year as they have in recent times, while the UK's decision to leave the European Union appears to have made both markets, if anything, more attractive to activists."
 
The report also addresses the growing sophistication of campaigns.
 
Steven Balet, managing director at FTI Consulting, says: "Companies that have already been targeted with activism and which may even have activist nominees on their boards, will not necessarily be immune to either a refreshed approach for control by the original activist or from being targeted by an entirely different activist fund." 

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