Expect more shareholder activism in 2012, says Okapi Partners

Expect to see more shareholder activism in 2012, says Okapi Partners president and CEO Bruce Goldfarb. In an exclusive interview with Corporate Secretary, Goldfarb predicts: ‘We are going to see significant levels of shareholder activism in 2012.’ He adds that his company is aware of ‘a number of activist investors that are taking very close looks at companies in terms of potentially nominating directors for election next year.’

Goldfarb’s proxy solicitation firm focuses on proxy solicitation strategy and execution for mergers and acquisitions, proxy fights and other transactions. It is one of the few firms that crafts strategies for issuers and activist investors, so Goldfarb’s insights on activists certainly hold weight.  

Activist investors can often be private equity firms, and the latest data from Mergermarket show that, in the US, private equity-backed buyout activity totaled $88.9 billion during the Q1-Q3 2011 period, a 30.4 percent increase over the same period last year.

If the economy begins to strengthen next year, the number of private equity deals could increase. Industries with the most deals include technology (421), industrials and chemicals (384), and business services (384).

Goldfarb (pictured left) says small-cap and mid-cap companies may show ‘significant vulnerability to contested election campaigns’ next year. He also offers issuers advice as the proxy season approaches:

‘The best thing companies can do is have a very active IR campaign year-round, probably working with a proxy solicitation firm on a regular basis to understand their shareholders and the issues that are of significance to investors that are potential activists so they can be better prepared, as opposed to being caught flat-footed when a 13D (beneficial ownership report) is filed or a volley is launched in a potential proxy fight.’