Europe and Asia-Pacific’s (APAC’s) corporate activism contributed to record global highs last year, with new groups initiating campaigns for the first time. This year is expected to surpass 2023 as the investing environment shifts to more favourable conditions, according to research.
Shareholder activism increased significantly last year, according to global bank Lazard’s annual review of the topic. Lazard found that last year’s activity reached a record high, topping the prior record set in 2018, with 252 new campaigns representing a 7% year-over-year increase.
“Europe and APAC were the largest contributors to the spike in activity, with each experiencing record levels of new campaigns,” the report said. “Both Europe (69 campaigns) and APAC (44 campaigns) had record years, both surpassing their five-year averages by 26% and 55%, respectively.”
Last year also saw an increase in first-timers leading campaigns with a record number of activists launching campaigns (183), a 21% increase from 2022 and well above the five-year average of 141, the report said.
Europe “drove the increase” with 31 new activists launching campaigns, more than double the number seen in 2022. In North America, the report said, first-time activists began 35 such campaigns.
Expectations for the year ahead
Three projected trends point to an increase in activism in 2024, according to research by law firm Vinson & Elkins: considerable demand for companies to be sold; greater board influence; and a more favourable economic environment.
“The world of corporate shareholder activism is poised for significant changes and challenges,” Vinson & Elkins said. “Activist shareholders have been a driving force in shaping the corporate landscape, pushing for reforms, and steering companies toward better governance and profitability.”
Strong economic indicators, including robust corporate earnings and a generally favourable market environment, will “incentivise activists to be more active in seeking opportunities for value creation”, the publication said. In response, corporations will be “prompted to reevaluate their strategic plans and operational efficiency”, potentially leading to better long-term performance.
This year is likely to surpass the level of activism witnessed in 2023, Vinson & Elkins said. Companies should be prepared to engage constructively with activists and prioritise shareholder interests to navigate the evolving shareholder activism landscape successfully.
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.
