Shareholder activism is often associated with campaigns
involving large, high-profile issuers. Yet as the Financial
Times reports in a recent article, referencing global data
from Activist Insight, there has been a slight upswing this year in
activism against relatively small issuers.
The data show that from the start of year to the end of July, 61
"micro-cap" companies—that is, companies with
market capitalizations ranging from USD $50m to USD
$250m—have been targeted by activist funds. 56 micro-cap
issuers were targeted over the same period in 2015. In contrast,
activism against the largest issuers has experienced a slight
slowdown, with 16 companies with market capitalizations over $10b
being targeted, compared with 22 over the same period last year.
According to the figures, activism against companies worth less
than $50m has held steady.
As the article suggests, there are several possible reasons why
smaller companies have been gaining increased activist attention.
campaigns involving smaller issuers
generally demand less financial wherewithal, which may prove
especially enticing to smaller funds who are newer to activist
increased M&A opportunities when
smaller companies are involved
the potentially increased ability of
activists to add strategic value at smaller companies, who may not
necessarily have access to the same kinds of legal, financial and
strategic advice as larger companies
The author would like to thank Joe Bricker, articling
student, for his assistance in preparing this legal
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All corporations should be concerned with conduct risk in 2017. The threat of loss, both financial and reputational, due to the actions of one, or many, managers or employees is greater than it has ever been.
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