The ultimate impact of the coronavirus (COVID-19) pandemic on shareholder activism remains largely uncertain and comparisons with the surge in activism that followed the 2008 global financial crisis are tempting, but suspect as it remains questionable whether activists can continue to rely on the same forces that were driving activism prior to COVID-19. In any case, companies that have had their valuations recently upended should assume that they may be targeted by an activist investor, either alone or in concert with others, and take steps to prepare accordingly.
As much of the world’s economy has come to a standstill in the wake of government-mandated social distancing to stem the spread of the coronavirus (COVID-19) pandemic, global financial markets continue to experience unprecedented volatility and numerous public companies have seen their stock prices plunge to unfathomable levels. At first blush, with so many companies trading at more than 50% off of their 52-week highs, it may appear that activist investors may have an endless supply of potential targets to choose from. However, even looking back at the experience of the 2008 financial crisis and the surge in shareholder activism that followed shareholder activism is in unchartered waters and the ultimate impact of COVID-19 on shareholder activism is largely uncertain.
