Hi everyone,
I am currently an Investment Banking Summer Analyst in the M&A group of a bulge bracket firm (think CS / BAML / Citi). One aspect of finance that I'd heard quite a bit and read about is shareholder defense - specifically, advising boards through hostile takeover attempts and in general providing advisory services to boards during times of shareholder unrest. I've talked to quite a few people asking for advice on how to get more involved in shareholder defense specifically - I know I am young in my finance career, but I'm extremely interested in the area.
Unfortunately, a lot of people have given me advice along the lines of "Well, you just end up working on cases of shareholder defense", but those seem relatively rare to bank on making a career out of it. Other people have suggested aiming to work at activist hedge funds and working back towards banking to develop a career in shareholder defense. I would love to hear what some of your guys' thoughts are.
Thank you so much, I appreciate it!
Almost every bank now has one. Not sure what you are talking about
To start, in response to several posts, a number of BBs and EBs have devoted defense teams (in several BBs, they're housed under M&A) and the number is growing as it is seen as a good way to diversify the IB business (along with restructuring) in M&A down cycles.
I think it's important to understand what activist defense work actually entails, in general:
(A) Corporate governance - understanding the rules/regulations within a company and within the broader legal context governing permissible actions by management, shareholders and other constituents (i.e. submitting issues for proxy) and analyzing strengths/weaknesses of a company's management/board structure (B) Financial analysis - analyzing returns to different constituents stemming from financial and market performance, dividends, buybacks, M&A, divestitures and other strategic activity (C) Public relations - managing the narrative in the public context, especially when an activist is publicly saying " support our initiative given how poor the company performs in areas X, Y, Z" (D) Shareholder management - somewhat tied to public relations, analyzing and understanding a shareholder base, how they view the client, how they act/vote, etc.
In the few anecdotes I have, activity (A) is typically split between banking and defense, most of the heavy lifting on (B) is carried by banking, and (C) and (D) is driven by defense.
So how to get in the door? In my view, given that activist defense is a newer area, there is no set path in. However, if you look at the heads of some of the most active defense groups, they either come from legal (Evercore, MS) or M&A (GS, JP, Houlihan) backgrounds. Those are also the most common routes in at the junior levels as far as I can tell, although, I've also seen individuals with public relations and investor relations backgrounds as well. If you're looking for a recommendation, personally, I would say get your foot in the door through the traditional IB recruiting process then once in, raise your hand when you declare or lateral in to the practice. Given that most kids are focused on other areas, chances are if there's a need and you stand up, you'll get a good shot.
Another tip, look at the job postings via a Google search and see what experience the top banks are looking for in candidates.
I don't agree with assertions that activist defense is not a revenue generator. I worked in M&A at a well-known boutique and worked on several assignments that progressed like this:
From our perspective, it was another way to be in front of the senior executives and Board of large public companies, so I'm not sure why that would be a bad idea.