M&A and Activism Preparedness: Considerations for Directors

In the current environment of unsettled capital markets and in the wake of post-COVID global events, directors need to be prepared to engage and respond to unsolicited M&A approaches and investor activism.

Unsolicited approaches can be received at any time and can range from an unexpected approach from a potentially friendly acquiror to the launch of a hostile takeover bid. In any case, an unsolicited proposal can trigger a flurry of activity on the part of a target and its board if they are caught off guard. Preparedness planning puts a target and its board in a better position to respond and can assist a board in properly discharging its fiduciary duties.

Activism has established itself as a permanent feature of the corporate landscape in Canada and globally. Activism has evolved from the sole domain of corporate raiders seeking opportunities with underperforming companies. Today, activism is much more broadly based and issues-oriented, encompassing performance, valuation, ESG and other themes. Activism has spread to larger issuers and market leaders alike, and no company can consider itself immune.

Corporate directors must be prepared to effectively respond to the challenge should an unsolicited proposal or an activist situation arise.

Highlights to be covered include:

1. the pivotal role of the board;
2. critical issues for board consideration;
3. complying with legal duties in challenging situations;
4. what to do when a proposal comes;
5. how to address conflicts;
6. key M&A considerations; and
7. key activism considerations