Filed under: Private equity industry, Activist investing
When the first signs of a slowdown in private equity were emerging, I and others wondered what effect it would have on activist investors. One of their favorite strategies is buying stakes in undervalued companies and then placing them into the hands of leveraged buyout artists. But with buyouts slowing down, what will activists do?
The Wall Street Journal reports (subscription required) that the credit crunch isn’t slowing them down: “New data compiled by FactSet Shark Watch, which tracks shareholder activism, show that these investors are, well, as active as ever. According to the data, 501 new activist campaigns were waged in 2007, up from 429 the year before. Such campaigns, in fact, picked up steam at the end of the year, with 135 launched in the fourth quarter, the busiest quarter in the past two years.”
This creates a fascinating question for activist observers: What will they push for, with buyouts less of an option than they were not so long?
Carl Icahn may have to invent himself once again. Without the benefit of flush private equity firms to scoop up cheap companies, activists may have to pursue more long-term means of value creation: corporate governance improvements, operational changes, and capital structure revamps.
The activists are staying busy. The question is will they be able to stay successful.
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