Activist investors determined to shake up the way companies do business are amassing record cash for their campaigns, and now investment banks are advising clients how to anticipate and thwart such vocal investors before they even show up.
Banks including Goldman Sachs, Morgan Stanley and JPMorgan pitch similar services to head off activists like Bill Ackman and Dan Loeb who undertake campaigns aimed at shaking up management, increasing dividends, or spurring asset sales.
'It’s literally a matter of career life and death for management teams and directors who are subjected to activism,' said Chris Young, head of contested situations at Credit Suisse. 'Many CEOs and directors have decided they’d rather go through the unpleasant process of taking a harsher look at themselves in private than a very unpleasant process in public'.
The preemptive services come amid a surge in activist campaigns that last year reached America’s biggest corporations, including Apple, Microsoft, PepsiCo and DuPont.
The number of individual U.S. companies targeted jumped 10% to 356 in 2013 from the year before, according to Damien Park, whose Doylestown, Pennsylvania-based Hedge Fund Solutions compiles data and advises boards and investors on activism.
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