Mergers and acquisitions (M&A) are turning into a 3D chess game with activist shareholders taking a prominent seat at the deal table, said Merrill guest speaker Jim Rossman, Managing Director, Head of Shareholder Advisory at Lazard, during an exclusive Q&A with Dennis Berman, Pulitzer Prize-winning journalist and Managing Director also in the Lazard Advisory group.
The remarks came at the start of Merrill DatasiteOne’s NYC launch party at 230 Fifth Avenue on June 21st. Doug Cullen, Merrill’s Global Head of Marketing, introduced the guest speakers and gave out customer awards to DAK Group, Cain Brothers, JLC Infrastructure and Bank of Montreal (BOM).
Long the domain of hostile takeover attempts and larger-than-life investors such as Mario Gabelli and Kirk Kerkorian, shareholder activism is going mainstream and public companies need to be ready, Rossman said. No longer “just about the road kill,” activists are targeting companies in the middle of the performance bell curve. “No one can see around corners and bad things happen,” he added.
As a result, companies must prepare extensively for activist events and, when the inevitable happens, extend a warm hand instead of a poison pill. To do so, Rossman and his group are increasingly being brought in early to “find all the warts” and take the executive team and Board through a simulation exercise.
But the best defense to activist shareholders is developing a strong relationship with them. This also means, of course, treating activists as key stakeholders where M&A is concerned, which poses tricky questions of how much information to share with them in any given process. “There’s a lot of complexity when an activist gets involved, and no good solutions,” Rossman said.
After the Q&A, guests moved to 230’s rooftop deck where Cullen gave a champagne toast and the festivities began!
Jim Rossman (left) with Merrill CMO Doug Cullen