Taylor Ingraham, director at ASC Advisors, has a decade of financial communications experience, serving both alternative investment management and corporate clients. At ASC Advisors, which works only with asset managers, he has assisted clients on a wide range of situations, including activist campaigns, investor days, message development and presentation training, and media relations. Prior to joining ASC Advisors in 2014, Ingraham spent five and a half years at Joele Frank, Wilkinson Brimmer Katcher, where he consulted public companies and private equity firms in financial communications surrounding M&A and other special and crisis situations, including activist defense campaigns.
Christopher P. Skroupa: Much of the focus on activists begins once their campaign starts. From a communications perspective, what are some of the things you work with your clients on leading up to that first public announcement?
Taylor Ingraham: Preparing before the first public announcement is critical in a successful proxy fight communications strategy. In addition to solidifying the key messages and arguments that will be the foundation of our client’s campaign, it is essential to shore-up any publicly available information on the firm, its employees and its potential director nominees. As we have seen time and time again, proxy fights can become intensely personal. As a result, we find it very useful to gain a firm grasp on what information is publicly available on interested parties so we are aware of what the other side may look to point out and attack during the fight.
Our clients are often not activists by strategy, but rather by necessity, acting only after considerable efforts to negotiate and implement change are rejected or ignored by the Boards and managements of their portfolio companies. Given this inherent reluctance to launch a fight in the first place, the initial preparation, research and understanding of how and where the fight may go and what issues may become target points can be especially helpful.
Skroupa: What’s the significance of the first announcement?
Ingraham: Proxy fights that go to a vote consist of many communications from both sides, however, the initial announcement is an opportunity to establish the points of contention on which the arguments will likely focus throughout the fight and to clearly layout the foundation of an investor’s campaign. While there is content that we would consider standard in that first communication, every situation, and every activist, is different so there are many things to consider. For example, it may be necessary to include more background on the firm and its history with the target for a first time activist than it would for a seasoned veteran.
Another key component of the initial announcement is working with the media to make sure that the key points are covered accurately and the background and expertise of the investor is effectively communicated in coverage. Beyond clearly communicating your key messages in the public announcement itself, having relationships with the influential reporters and publications and working closely with them is critical in making sure your arguments are disseminated effectively to key audiences. There is much more that goes into media relations than simply sharing the public announcement, especially during a campaign, and doing so in a way that generates the most impactful coverage can go a long way in shaping the public perception of a fight.
Skroupa: Does the first time activist look to accomplish different things than the veteran? Do their communications differ? If so, how?
Ingraham: At the end of the day, every investment manager approaches a position with the same goal – creating value for their investors. When publicly engaging with the board and management team becomes necessary, first time activists and veterans are also aligned in that they are looking to implement change to enhance value. We have all seen campaigns where the company has prevented a manager from obtaining seats on the board and to have the company’s stock price decrease, and we have seen an activist gain seats on the board and the stock price appreciate. Any activist that has ‘won’ a fight and gained representation on a board would not consider it a victory if they were not able to make changes at the company level to drive shareholder value afterwards, and that rings true for the first timer and the veteran.
From a communications perspective, we often find it useful for a first time activist to spend more time explaining who they are to the public and to fellow shareholders. Specifically, clearly demonstrating to fellow shareholders, who at the end of the day are the target audience and the ones who carry the vote, your depth of knowledge about, and history with, the company, the industry and the strategy at hand can go a long way in strengthening the viability of your arguments and proposals. While we find this useful at the beginning of the fight, we find it more effective to focus primarily on the arguments and issues at hand once the initial introduction has been made publicly.
Skroupa: When people refer to activist investing, they are almost always thinking of investors trying to gain board seats or enact change as equity holders at public companies. What are some of the other types of ‘activism’ your clients have been involved in? Do they use similar communications tactics?
Ingraham: Activism, or actively engaging on a position, has been a tool applied by our clients across a number of different investment areas, including restructurings and distressed debt, sovereign debt, and obviously in equities as well. For each situation, it is critical to asses who the key parties are, and how best to present a case and promote your arguments in a targeted and effective way. Unconventional activism campaigns often require equally as creative approaches, and thinking outside the box is critical. All angles must be considered, be it political, media-centric or economic.
In the way that a shareholder letter in a proxy fight is used to reach retail and institutional investors, tactics to engage with and appeal to individual bondholders in a fight against a sovereign government may need to be quite different. While there isn’t a set playbook for activism in publicly held companies, an even broader creative net must be cast when working with sovereign debt and other “atypical” activist battles. That said, as we have worked with a number of clients on restructurings and in the sovereign arena, we have found certain tactics and tools that could really make an impact in presenting a case to key parties in a proxy fight.
Skroupa: How have the communication strategies of activist investors evolved over the past several years
Ingraham: It is not just the communications strategies of activist investors that have evolved over the past several years. The alternative investment management industry has seen a significant increase in publicly available information, whether that be a firm website, social media profile or official firm announcement. When looking at activism campaigns, the core communications goals have remained the same, however the way in which messages to shareholders and boards can be distributed has expanded, including the use of social media platforms, targeted advertising and other digital media.
One thing these additional outlets and distribution options have resulted in, as I mentioned earlier, is the necessity to monitor all publicly available information on a firm, company, employee or director nominee. Having a firm grasp of what is out there allows you to understand the areas where a company may look to attack and prepare for it. Knowledge of one’s digital real estate and reputation – whether controlled by the firm or not – is crucial to planning messaging and preempting negative comments.
Skroupa: What are some of the tools and tactics you see activists utilizing more in campaigns moving forward?
Ingraham: Internet and social media platforms are continuing to provide new and effective ways to target key users and deliver relevant information. As the way activism is viewed and approached by both investors and companies continues to evolve, we believe the use of social media and targeted digital communications will increase. Certain tools, some of which we have already seen used effectively in sovereign and restructuring situations, will become more commonplace in proxy fights as well.
That said, in the near-term, conventional media will continue to be critical in delivering messages to key audiences and shaping the public perspective of a fight. Being able to work with reporters and publications to help shape coverage and present key arguments and messages will always be an incredibly important and influential aspect of proxy fights.
Check out our various conferences on shareholder activism here: https://skytopstrategies.com/conferences/.
Follow us on twitter @SkytopStrat, and on Facebook @SkytopStrategies. Find us on YouTube, too, for exclusive interviews, panel discussions and debates that are prime examples of the market moving dialogue held at our various conferences and summits around the world.