August 14, 2015

JOBS Act: Additional Benefits?

When President Obama signed the JOBS Act in 2012, one of the primary purposes was to ease the cumbersome IPO process by creating a confidential submission process. Well, according to this WSJ article, it looks like companies filing confidential IPOs are getting another benefit – M&A visibility. The article provides examples of companies that seem to have utilized the IPO on-ramp to facilitate an M&A transaction.

Here’s an excerpt:

Since the owners of a company preparing to go public want to monetize their investment, the very existence of the confidential filing can accelerate a sale process for a company, and ultimately lead to a less risky outcome for private-equity and venture-capital investors, who can get paid in one fell swoop once an acquisition closes.

On a related subject – as we blogged about in July – the House of Representatives passed a bill to reduce the amount of time that a company must publicly disclose its IPO prior to its roadshow – from 21 days to 15 days. See this WSJ blog discussing the potential change.

Retail Investors: Open to Activist Investor Viewpoints?

Here’s news from Davis Polk’s Ning Chiu:

A recent survey by the Brunswick Group counters beliefs that retail investors are always “pro-management” in any voting contest. The survey examined the views of 801 US-based individuals who play an active role in their personal investment decisions.

Two-thirds are aware of shareholder activism and 74% think shareholder activism adds value to companies “by pushing corporate executives and boards to make decisions about issues that company management is otherwise unwilling to make.” Most of these investors say that activists force companies to aim for long-term value creation for shareholders, while only a slight majority indicate that companies are already doing enough to return value to shareholders. 51% do not believe that boards of directors are working in retail investors’ best interest.

Interestingly, excessive executive compensation or executive compensation that is not viewed to be tied to a company’s performance is the main reason that a retail investor would support an activist proposal. Retail investors also tend to trust the financial press as the best source of information during a campaign, although a large majority would also read materials from the company as well as the activist investor and research the issue online.

The importance of retail investors, particularly in close contests, has been of increased interest lately and could be the subject of more focus as activism increases. The survey indicates from other sources that as of July 2015, 300 companies have already been subjected to activist campaigns, a 23% increase over the same period last year. Moreover, in 2014, a reported 249 companies were targeted by activists that had not experienced campaigns in previous years.

Podcast: Recap of ’15 Proxy Season

In this podcast, Jamie Carroll Smith of the EY Center for Board Matters reviews the 2015 proxy season, including:

– What are the proxy access takeaways from this year’s proxy season?
– How has investor engagement during this year’s proxy season evolved?
– How have activist hedge funds impacted this year’s proxy season?
– What was the volume of shareholder proposal submissions during this year’s proxy season?
– What were the topics of interest?

– Jeff Werbitt