Barbarians in the Boardroom: Activist Investors and the battle for control of the world's most powerful companies

by Owen Walker

Activist investors have sent shockwaves through corporations in recent years, personally targeting directors and executives at some of the world’s largest companies. No longer satisfied with operating on the fringes of business, they are now a firm fixture in the boardroom. Up to a quarter of public companies could be targeted by activist campaigns in the coming years, with directors and executives at those corporations threatened with losing their jobs. The trend, which began in corporate America, has spread to the UK, Europe and Asia, taking in several high profile companies. Barbarians in the Boardroom tells a compelling story of boardroom bust ups, dumped CEOs triumphant activists and pared back companies. It reveals real-life examples and interviews with executives and investors to explain why and how activist investors have managed to storm Wall Street and tear down City citadels. Owen Walker provides an insight into the way activists think, how they decide to target a company and how directors and executives could possibly work with them rather than against them. ‘A terrific book about the personalities, strategies, and tactics of high-profile activist investors. The stories are fascinating about the activist game plan and how it is changing...’ Robert J. Swieringa, Professor and Dean Emeritus, Johnson Graduate School of Management, Cornell University ‘Excellent overview of activist hedge funds - it tells readers how these funds brought about significant changes in corporate boardrooms.’ Robert C. Pozen. Senior Lecturer at MIT Sloan School, former Chair of MFS Investment Management "A great guide to how activist investors work - essential for corporate directors, investors and anyone with a passing interest. Filled with insights into a number of the most high-profile personality clashes and boardroom battles." Barry Parr, Co-Chair of Pension Trustees AMNT and Non-Exec Director of CrowdBnk Ltd “Barbarians in the Boardroom is an excellent forensic analysis of the new era of activist investing and the first to cover campaigns that have ousted S&P 500 boards, promoted giant mergers and permanently changed the roles played by boards of directors.” Josh Black, Editor-in-Chief, Activist Insight ‘The rise of shareholders activists is one of the great capital market stories of the day. Packed with riveting tales from the activist battlefront, Owen Walker's book does it full justice.’ John Plender, Financial Times Columnist

Genres: Finance, Business, Nonfiction

264 pages, Paperback

Published May 26, 2016

Reviews

[HP · Rating 4 out of 5]

Very friendly and easy to read, I almost ate the book. I would have liked more stories.

It is maybe the only book that goes deep into Activist Investing.

I was interested in the subject, now I want to be an activist investor.

[Jose Miguel Porto · Rating 3 out of 5]

The activist playbook starts with the activist buying in company shares until they amass a considerable amount of equity in the company (usually around 5% or more).  After buying in on 5% of the companies stock, the activist is required to disclose such position and filing a 13D with the Securities and Exchange Commission, which usually includes a public letter to the board. After having a meaningful position in the company's stock the activist will push for the board to accept their director candidates. If the board does not agree or settle, then a proxy fight starts.  Board seat are a means to an end. 

Activists agenda include divesting unprofitable business, changing executive compensation and corporate governance, the best use of the company's cash (including dividend and share repurchases). Negative campaigning and short selling are the most controversial tactics (such as the Herbalife case and Bill Ackman's 1 billion bet).

Along hedge funds, activist investors had performed better than other funds. This has increased the median size of activist hedge funds and allowed for activists to pursue bigger preys (i.e. Microsoft). Bigger prays may be campaigned with less than a 5% stake. 

Activism plays an important role in bringing accountability to the board and management in public corporations.  When the board and management underperform, they will most likely be prey to activists who will campaign for board seats and structural changes to the companies (expecting such changes to provide higher returns than traditional equity and bonds markets).

[Alexander Walsh · Rating 5 out of 5]

The author presents a behind-the-scenes look at a series of situations involving several prominent activist investors. It starts with Darden, where the existing board was completely replaced. It later gets into more nuanced situations like Yahoo, Valeant, and DuPont. I'd love to see a sequel with more case studies.

[Victor Ladrière · Rating 4 out of 5]

Good insights on the powers at play in the big companies' boards, and the players' strategies