Is your company at risk of activist investors? Experts agree that the best defense against shareholder activists is a good offense. CEOs can prepare for activist interventions and outsmart activist campaigns by incorporating rapid earnings expansion tactics into their strategies to reduce vulnerabilities. Through pricing and portfolio, zero-based budgeting, strategic sourcing, lean asset strategy, working capital productivity, and CapEx excellence tactics, companies can best be prepared for the threat of activist investors.

1. Rapid Earnings Expansion:
The Best Defense Against
Activist Investors
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Source: Capital IQ
Since the beginning
of 2016, at least 33
activist campaigns
have been launched
against US companies
with more than $1 billion
in revenue.

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Activist investors are a
genuine worry for corporate
management teams today:
More than 70 of the
Fortune 500 have at
least 5% ownership by
activist shareholders.
Source: A.T. Kearney Analysis

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Many activists are making
large investments in
companies, but those
with small stakes are
successfully influencing
even the largest firms.
Source: JPMorgan Chase

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Activists are increasingly
taking board spots to push
for rapid results improvement.
Five of the biggest activist
funds have taken 108
board positions in
the past five years.
Source: Bloomberg

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Even companies logging steady
performance may be targeted by
activists. Failing to meet analysts'
expectations can be all it takes.
This means companies can easily
drift into the activist's bullseye,
particularly in times of sluggish
revenue growth.
Source: A.T. Kearney analysis

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Source: A.T. Kearney analysis
146 of the Fortune 500
missed the consensus
street estimate when
reporting their most
recent fiscal year
earnings.

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If your company is
underperforming, then
the conditions may be
right for activist investors
to enter the picture and
start demanding profit
improvements—and fast.

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When activists
enter the picture,
you lose the
power to chart
your own course.

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The actions activist
shareholders propose
can cause harmful
disruptions to your
business, by forcing
rash cuts that are neither
well-thought-out nor
supported internally.

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Companies have
the ability to improve
their results—on their
own terms and with
urgency—before
activist shareholders
begin making
their demands.

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By pursuing Rapid
Earnings Expansion
on its own terms,
management can
improve its P&L and
proactively eliminate
the activist threat.

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Rapid Earnings Expansion
Rapid Earnings Expansion
sets an audacious earnings
target, builds it into the
company's forecast,
and makes reaching
the goal a no-excuses
endeavor.

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Rapid Earnings Expansion
The best defense is a
good offense. Management
can pursue Rapid Earnings
Expansion to protect against
activists. The keys: Do it once.
Do it big. Do it on your
own terms.

15. Learn how Rapid Earnings Expansion
can help you chart your own course
against activist investors.
A.T. Kearney is a leading global management consulting firm with offices in more
than 40 countries. Since 1926, we have been trusted advisors to the world’s foremost
organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve
immediate impact and growing advantage on their most mission-critical issues.
For more information, visit www.atkearney.com.
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Rapid Earnings Expansion