One

Whilst we have seen a decline in new public activist campaigns and demands since the onset of the pandemic, there is much going on below the surface. Many activists have adopted a "wait and see" approach regarding public campaigns and are instead repositioning themselves to take advantage of share price volatility and preparing for strategic engagement once the path ahead is clearer. We expect to see a rise in engagement in the coming months and are helping companies to prepare for this.

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Two

Activists take many forms. Increasingly, traditional activists and private equity firms are seen to be adopting each other's techniques as activists bid for whole companies and private equity firms take minority stakes in public companies, not just to gain a foothold ahead of a "take private" transaction. Institutional shareholders, former board members, founder shareholders and some corporates are actively engaging with company boards and running public campaigns.

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Three

Activists are focusing especially on the "E" and the "S" of ESG as part of their investment theses and campaign rhetoric. We expect issues around sustainability and resilience of business model, as well as board diversity (in particular, racial and gender diversity), will increasingly be focused on as central campaign theses.

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Four

Break-up activism, transaction promotion or disruption and "bumpitrage" are all viewed as favourable routes to generate value, with M&A related activism accounting for around a quarter of all activism campaigns in the UK in 2019. Although the incidence of this type of campaign has fallen away markedly during the pandemic, as we emerge from lockdown we expect M&A levels to return and, with this, M&A and break-up related activism. Investors will focus on companies that are likely to outperform on the way out of the current economic crisis and those that may become vulnerable to a takeover.

Five

The first shareholder activist is thought to be Isaac Le Maire, a disgruntled former director of the Dutch East India Company. A father of 22, he is also believed to be the first person to ever short a stock, back in 1609. Perhaps not as successful as today's activists, his tombstone reads: "Here lies Isaac Le Maire, a merchant for more than 30 years, blessed by the Lord, he gained a lot of money and lost it all, except for his honor."

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