The activist agenda

How can parties win support for a deal that is facing opposition?

Securing irrevocable commitments to support a deal ahead of launch can send a strong signal to the market that the deal will go through (although in some jurisdictions there can be regulatory issues with receiving such commitments that need to be navigated).

Where there is a key shareholder whose support could mean the deal is successful, a bidder may elect to offer a form of consideration that is attractive to that shareholder, such as an unlisted securities alternative (known as stub equity). It will be important to ensure that any such offer is compliant with any legal or regulatory restrictions (such as a requirement to treat all shareholders equally) but this can be an effective tool in securing support for a transaction. 

While we do sometimes see deals that are recommended by a company being rejected by its shareholders, securing a board recommendation is enormously valuable in helping a deal go through. In deciding whether to recommend a deal, the target may (and in some jurisdictions, is required to) not just look at price but also at what other commitments it might want to secure from the bidder, for example in relation to the running of the target business going forward, investment in the business or the protection of its employees.

Being proactive and creative on shareholder engagement, and monitoring shareholder and market views (and remaining a little paranoid), is also important. Shaky approval positions can sometimes be managed through extending timing for shareholder votes, giving bidders time to increase voter participation or potentially recut the transaction, or the approvals being sought, if required. 

Where the target board is not willing to engage with a bidder or recommend a deal, we also continue to see bidders take the bid directly to shareholders. 

Outlook for 2026

It will be interesting to see what impact the proposed changes to stewardship in some of the largest asset managers will have – it may well see them being more active in scrutinising the governance and direction of companies but having less dialogue with those companies. 

With continuing uncertainty around what geopolitics will bring, what is clear is that activists will continue to look for companies whose strategy they think should be different or better or which they see as undervalued. While certain sectors may see an increase in activism in a particular period – for example investment trusts in the UK are seeing intense activity at the moment – any company, in any sector and of any size may become the focus of an activist and should be prepared for that. 

Both activists and other investors, and company management, should ensure they understand what tools are available both to themselves and to other parties and utilise them appropriately.