Analysis-Activist investors set to push for changes as dealmaking picks up

By Svea Herbst-Bayliss and Emma-Victoria Farr

NEW YORK/FRANKFURT (Reuters) -Activist shareholders are poised to push harder for corporate changes in the coming months, finding fresh confidence to launch campaigns as the pace of dealmaking picks up again.

Bankers, lawyers, and investors forecast a spike in fights over corporate leadership, operational improvements and spin-offs in the second half of 2025. Many global corporations will gird for costly and time-consuming battles, they said, even as some activist investors may be willing to compromise.

"Activity in the back half of the year will be more significant," said Alfredo Porretti, global co-head of Shareholder Engagement and M&A Capital Markets at JPMorgan Chase. "Activists are aiming more carefully but are not pulling the trigger yet."

The expected rebound in campaigns at global companies will follow an unusually quiet second quarter when only 59 were launched, including ones at U.S. information technology company Hewlett Packard Enterprise and U.S. consumer healthcare company Kenvue, which makes Band-Aids and Tylenol.

Between April and the end of June, the pace of campaigns where investors push for changes to boost the share price shrank by 16% from a busy first quarter. They were down 32% from a year ago, Barclays' data show.

Investors said many activists remained on the sidelines in the second quarter, worried about how U.S. President Donald Trump's tariffs and tax policies might affect their proposed strategies to improve corporate performance.

"Activists re-evaluated public campaigns in the second quarter given equity market volatility and macro uncertainty but, privately, there were significant levels of agitation through to mid-year," said Pam Codo-Lotti, chief operating officer of Activism and Shareholder Advisory at Goldman Sachs.

Looking ahead, both established corporate agitators such as Elliott Investment Management, Jana Partners and Sachem Head Capital Management are reviewing new ideas, as are newcomers who have never tried to publicly prod companies to perform better, people familiar with their work said.

Already in the first days of the second half, activist Starboard Value built a stake in online travel company Tripadvisor with plans to engage with management.

Activists usually target companies during the fall and winter months, long before the next year's annual meeting season in the spring. Often they start with private talks before making demands public.

Companies are preparing for the expected onslaught.

Board members with negative memories of previous activist pressure are pushing management to hire advisers now to assess vulnerabilities and take pre-emptive action, said two directors at large American companies not permitted to discuss the preparations publicly.

Long-tenured directors might be replaced or chief executives not keeping pace with peers might be moved out, they said.

"In times of economic volatility and uncertainty, shareholder activism is more likely due to weak spots in companies," said Ingo Speich, head of sustainability and corporate governance at German asset manager Deka Investment. "Poor governance is a constant source of shareholder activism. Companies in transition mode are more vulnerable and open windows for shareholders to become more active."

So far this year, the favorite demand for activist investors has been a call for board changes, appearing in 43% of campaigns during the first half of 2025. Activist Mantle Ridge successfully pushed for board changes at Air Products and Chemicals and Elliott did so at Phillips 66.

Looking ahead, bankers and lawyers expect a pickup in demands for sales of companies or spin-offs, which featured in only 33% of all campaigns in the first half. They pointed to growing investor confidence that the pace of global dealmaking will pick up.

"We expect public activist campaigns levels to accelerate in the second half of the year with renewed focus on M&A targets, of course barring macro headwinds," Goldman's Codo-Lotti said.

After making a name for themselves years ago with noisy public campaigns waged by investors like Carl Icahn, Bill Ackman and Daniel Loeb, many activists are now ready to adopt a lower profile and stay out of the headlines, bankers and lawyers said.

Institutional investors, who jointly oversee $35 trillion in assets, "overwhelmingly view activism as a useful market force" and 77% see it as a catalyst for change while 71% call it a driver of accountability, according to new research from shareholder advisory firm SquareWell Partners.

With their reputations established, activists may be ready to stop short of waging expensive and messy proxy fights, agreeing instead to quiet settlements.

For instance, Jana Partners had long pushed French-fry maker Lamb Weston for operational and board changes and possibly even a sale of the company. In late June, the hedge fund averted a high-profile boardroom fight by scoring a settlement that put four of its candidates on the board and added two that both sides agreed on.

"Peace may indeed be breaking out with more settlements reached and board seats going to the activists," JPMorgan's Porretti said, adding "but the settlements are reached only if each side is feeling a little weakness."

(Reporting by Svea Herbst-Bayliss in New York and Emma-Victoria Farr in Frankfurt; Editing by David Gregorio)