Alex Savin is a Senior Partner at Blackmoor Investment Partners.
Activist investors are often unwelcome arrivals on shareholder registers. They are seen as disruptive, aggressive and focused solely on short-term gains. While that perception is understandable, it doesn’t reflect the kind of activism I believe in.
To be effective, activist investors should focus on companies that are fundamentally strong but are underperforming. For example, growth may be lagging, margins could be under pressure or management has grown complacent. These companies often don’t need a revolution—they need a shareholder or partner willing to help drive meaningful, sustainable change.
At my company, we take a long-term, constructive approach to activism that I recommend to others as well. Rather than being a short-term disruptor, build long-lasting relationships. Invest in a small number of companies at a time (we usually invest in 10 to 20), and devote sufficient time and senior resources to work with each of them over a long engagement period. Build relationships with the CEO and the board before making long-term investments, and talk to other shareholders to understand their perspectives. Always undertake detailed research of any target company and its markets before you act.
Activists Investment Criteria
When engaging with potential investment opportunities, always focus on long-term value creation opportunities. They may be found in implementing strategic improvements, executing strategic M&A, finding operational efficiencies, improving capital structure or strengthening governance.
A strong board, one that is aligned with the top management team but is ready to challenge them, is always a key component of any investment decision. It is surprisingly common in Europe to find boards, even top management teams, not fully aligned with the long-term interests of shareholders. Boards are too often not sufficiently involved or informed to challenge management teams.
This can be because the board members do not have enough bandwidth or they do not have the right skills and experiences to address the company’s challenges and opportunities. The issue is often escalated by the lack of independent intelligence they receive; their regular briefings typically come directly from management and with their own interests in mind, rather than from independent third-party sources, making it harder to hold them accountable.
What Is Success?
Successful activist engagement should not be measured by short-term share price movements, though sometimes it does matter. Success should first and foremost be measured by what will become the building blocks of a company’s long-term success: whether a company ends up with a high-performing board, the right executive team and a clear plan for long-term value creation.
Take my company’s investment in one particular company as an example. Coming out of the pandemic, the business was risk-averse—understandable, given the leadership team’s strong finance backgrounds. But it was clear that the company was a post-pandemic winner, and to thrive, the company needed to shift from defense to offense.
We invested, shared our research with the board and other shareholders and proposed a refresh of leadership. That resulted in a new chair and a refreshed board, a new CFO and a new CEO, who supported a more ambitious growth strategy and medium-term targets. Three years later, we’re seeing significant progress and we maintain a regular, constructive dialogue with the team.
Of course, there can be friction. And that’s healthy. It’s important to welcome well-informed, insight-based debate. Company boards and top management teams should be willing and interested in hearing detailed analysis and constructive criticism from engaged shareholders. For our part, activism should be thoughtful, with insightful, fact-based engagement. It should not be confrontational. For some, including myself, the preference is always to work behind closed doors rather than running public campaigns. Respect breeds better results, and fellow shareholders also often appreciate such a respectful approach.
Advice From An Activist Investor
For management teams and boards facing activist pressure, my advice is simple: Know your shareholders. Not all activists are the same. Some are short-term, loud and looking for a quick win. Others bring deep market knowledge and a commitment to long-term value. Do your homework. Understand who’s approaching you, what their track record is and what value they can add.
If an activist comes with well-researched ideas and serious backing from other investors, listen. Consider taking advantage of the insights they may offer, like competitive benchmarking, market analysis or operational expertise. This kind of information is expensive to generate internally. Why not use it?
Activist investing is evolving. Portfolios are becoming more concentrated. Campaigns are becoming more diplomatic. And the focus is shifting from quick financial engineering to driving operational excellence and sustainable growth.
Boards that engage intelligently with thoughtful activists, rather than reflexively resisting, will be better placed to steer their companies toward long-term success.
Because at the end of the day, activism done well isn’t about taking control. It’s about helping good companies become great ones.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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