Tip Sheet: Four Tips for Handling Shareholder Activists

By Betsy Brod While there are no tried-and-true steps to take when a shareholder activist contacts a company's management, there are actions that can mitigate potential damage. A study that evaluated 13D filings between 2001 and 2005 found that most interactions between activist shareholders and companies are not intended to be hostile and, when they do escalate, it is typically a result of a lack of engagement and/or communications by the company target. Most of the actions that would be recommended for company being targeted by an activist shareholder are things that public companies should do regularly as part of an ongoing IR and PR program to ensure good relationships with their investors, including the following best practices: *Know who owns the stock, and talk to the shareholders on a regular basis. There is probably nothing more important than maintaining an ongoing dialogue with your shareholders both in good times and when things are not going according to plan. Companies tend to hide when the news is not good instead of getting in front of the situation.

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