UK companies face higher risk of activist action

Research from consultancy Alvarez & Marsal reveals that 54 UK companies are currently activist targets, and that more than two-thirds of activist action across Europe include demands for boardroom changes.

UK companies are 32% more likely to be targeted by activist investors than European counterparts, according to the latest research from professional services firm Alvarez & Marsal (A&M).

The advisory firm’s quarterly survey also reports that since January 2015, 69% of all activist demands in Europe have included calls for a change in boardroom personnel.

A&M also says that there are now 54 British companies who are “predicted to be under threat from public activist targeting”.

The survey, the A&M Activist Alert, examined the position of 1,170 companies across six countries: the UK, Germany, France, Switzerland, Scandinavia, Benelux and Italy.

The research revealed that Germany makes up just 16.1% of the sample, yet it produced 10.8% of the predicted targets.

Boards are also under pressure to correct course more quickly. The research says that the time between first evidence of underperformance and being targeted by an activist has fallen from two years, in 2016, to 1.9 years in 2017.

European activists are “on the march” too, said A&M. A year ago they accounted for 22% of activist events, a figure that has risen to 26% in 2017.

Malcolm McKenzie, managing director and head of European corporate transformation services, said: “Activists are becoming increasingly impatient with boards and perceived sub-optimal performance.

“Boards need to ensure meaningful change is delivered, with positive results being shown clearly, without delay. Any transformation programme that takes longer than 18 months to produce tangible results will be too little, too late.

“Our research has again shown that activists don’t go for the weak and underperforming companies. They are focused on second quartile performers that could make the step up to first quartile.

“We have also found that, while the UK remains a key target, activists’ crosshairs are increasingly focusing elsewhere in Europe and funds are showing a greater ability – and willingness – to adapt their approach to the local environments and sensibilities.”

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