Publications

Activist Fund Structuring

Spring 2005
David Nissenbaum | Maria Gabriela Bianchini
Activist Investing Developments - Spring 2005

Utilizing activist or corporate governance investment strategies (which are referred to together below as "activist strategies") in a traditional hedge fund structure has its benefits and presents certain challenges. Fund managers utilizing these strategies usually desire to use their expertise and their fund's influence as a minority shareholder of a company to effect change in the company in order to increase the value of the fund's investment. The techniques an activist manager may use range from talking to management to publicly advocating for change to campaigning to replace management. Funds that focus on corporate governance often will advocate for the nullification or removal of provisions such as poison pills and staggered voting for directors by seeking board resolutions or amendments to a company's governing documents or agreements. Unlike private equity funds and other kinds of "takeover" investors, activist strategies usually do not seek to control a company or necessarily hold an investment for more than a few years.