Is There A Rise In Activist Investor Activity, And If So, What Is Driving It?

A: TODAY, WE ARE USED TO SEEING SHAREHOLDERS use proxy battles to insert their representatives into the board of directors (eg. Medicines Company and Ariad). Further, the makeup of a typical company’s shareholder base is rapidly changing. Exchange Traded Funds (ETFs), which hold a basket of company securities, have been growing exponentially. ETFs now have $5 trillion under management and have historically been longer term passive investors.

These ETF sponsors believe they must more actively engage with companies and their management teams because, by and large, companies have not adequately explained their long-term strategies. This is a significant advancement over the traditional passive way that ETFs have generally voted in favor of simply accepting management’s proposals, and it seems a new wave of shareholder activism is underway.

DENNIS PURCELL
Dennis is a founder and senior advisor of Aisling Capital and has completed over 200 transactions and supervised over $15 billion in life science industry financing and advisory assignments.