An article by Bill George and Jay Lorsch
Harvard Business Review - May 2014
Activist hedge funds are playing a larger role in interactions between corporations and markets. Their game is simple: They buy stocks they view as undervalued and pressure management to do things they believe will raise the value.
Although the activists sometimes have good ideas, they may push for radical course changes that can be disastrous for an organization. Its crucial to be prepared for them so as not to be led astray.
You can tackle this challenge by:
- Having a clear strategic focus
- Analyzing your business as as activist would
- Having your external advisers lined up in advance
- Building board chemistry
- Performing against declared goals
- Not dismissing activist ideas out of hand
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