USA TRENDS AND DEVELOPMENTS Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters LLP
held a 47% share of ongoing activist campaigns in 1H24, the largest among all industry sectors. The majority of activist demands for the sector centered on board representation, operational efficiency or M&A. Early success rates for activ- ists in the sector for 1Q24 were low. One half of the campaigns launched targeted large-cap firms, and, of the 1Q24 TMT large-cap cam- paigns that were concluded, none were suc- cessful for the activists. As 2024 has progressed, activists appear to be shifting towards targeting small-cap companies as a change in strategy. As activists continue to advocate for value crea- tion, they may pressure tech companies to divest non-core businesses that do not align with the company’s strategic focus, or push for acquiring companies with complementary technologies or expanding product lines, particularly as the M&A market continues to strengthen. Alternatively, activists could be shifting from advocating for growth towards seeking operational efficiency.
Activists may also further scrutinise past and potential transactions in looking to maximise shareholder value. All said, there are several angles activists may take with the shifting mar- ketplace and increasing competition, including pushing for some form of M&A. Given the con- stantly changing development of AI and related technologies, tech companies should remain focused on regularly assessing their strategic goals and should be responsive to sharehold- er engagement, as activists may be similarly inclined to demand strategic reviews.
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