R&C: What do you consider to be the most significant developments in the shareholder activism space over the past 12 months or so? To what extent are you seeing an increase in activist campaigns, and what are some of the key factors driving them?

Hoffmann: One of the biggest developments over the last 12 months in the shareholder activism space is the use of artificial intelligence (AI). Thus far, we have seen AI used to help predict the likelihood of a company being the target of an activist campaign, and both activists and their targets have employed AI to enhance their likelihood of success in a campaign. For example, Goldman Sachs has developed a smartphone app to assist clients in assessing their exposure to activists. The app goes through historical data relating to a public company, its shareholders and other information, and from that data produces a score that predicts the likelihood that an activist may target that public company. From talking to investment bankers, it is evident that they are actively using AI to analyse the shareholders of target companies and to sift through previous behaviour of the company’s shareholders, shareholders’ reactions to the activist, and the type of proposal the activist is proposing, and, finally, applying that analysis to suggest potential responses and new investors who would be more inclined to support that type of response. Similarly, the data can be filtered to help inform the activist as to what type of proposals they should be making to the target company’s shareholder base, in addition to helping activists on the front-end identify potentially vulnerable targets for their campaigns. In all, the widespread use of AI in activist campaigns seems poised to start an arms race, of sorts, as each side tries to find the best tools to gain an advantage.

Oct-Dec 2018 Issue


ICSA: The Governance Institute

Innisfree M&A Incorporated

McDermott Will & Emery LLP