Although activist investors are successful at improving margins, they struggle to drive growth. We analyzed 55 companies over the past 10 years in which shareholder activists had a significant impact on company governance and strategy, and compared their performance to that of their industry peers. (The aims of activist actions included business focus, board composition, business restructuring, director election, focus on growth, board representation, general cost cutting, operational efficiency, and removal of CEO.) In five industries, we found at least seven instances of what we identified as highly “activated” companies. In four of the five industries, the targets improved EBITDA margins relative to their “non-activated” peers during the three years after being activated. But in all five industries, highly activated companies grew revenues much more slowly than their non-activated peers in the same time frame.
Authors: Joseph Duerr, Larry Jones
Source: strategy+business
Subjects: Corporate Governance, Economics, Finance
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