The Deal Activist Investing Today: Freshfields' Klingsberg, Bieber Eye Consultants as Wedges
Jan 24, 2024
Ethan Klingsberg and Elizabeth Bieber, leading activist defense attorneys at Freshfields, dive deep into the world of activist investing. They discuss the growing influence of firms like Elliott Management and the complexities of consultant roles in corporate decisions. The duo highlights the tension between activist investors and corporate governance, particularly in insider-controlled companies. They also address board dynamics, subcommittee formations, and how companies can strategically handle activist challenges to protect their interests.
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Consultants as Activist Wedges
- Activists use management consultants to support their operational ideas despite management's feasibility concerns.
- These consultants often have a tacit understanding with activists, pushing activist agendas to create board-management divides.
Control Consultant Selection
- Ensure management selects and oversees consultants to avoid biased agendas pushed by activist-backed board committees.
- Avoid allowing activist-dominated subcommittees to pick consultants who can push unrealistic strategies.
Subcommittees as Power Wedges
- Activists seek subcommittees under various names to exert outsized influence over key strategic decisions.
- These committees consolidate power in few hands, often activist-backed directors, bypassing full board oversight.