Benevolent Hostility


Developing outstanding assets into outstanding companies.

Overview

Activist investors act as important intermediaries in capital markets. While an inherent bias in favor of incumbent management may once have existed among institutional investors, this is no longer always the case. Today, open communications with activists can build credibility with shareholders and potentially enhance corporate strategies.

The reason – like M&A acquirers – activists aim to arbitrage the value gap between poor company performance and good company performance. In other words, instead of speculating about future performance, we aim to influence future performance.

Putting the Active In

Attractive Investments

While they have gained notoriety for their confrontational approach, activist investors traditionally aim for a collegial “hands on” approach with incumbent management.

We are proud of WSD Capital Management’s role as a positive economic catalyst for the companies in our portfolio. We work to identify, invest and engage in difficult and complex situations with the explicit objective to enhance the value of businesses, objectively and expediently, for the benefit of all stakeholders.

Targeted Opportunities

Customized Solutions

Significant shareholder value lies hidden in many public companies that is difficult to unlock without commitment and proactive involvement. Accounting consolidation makes many complex businesses look simpler than they really are. This is important given that markets rely on consolidated data for valuation purposes.

The key to our investment approach is the application of the right mix of skill sets to discover and develop the right opportunities:

Benevolent Hostility

Efficient capital markets “discipline” companies by punishing poor decisions through declining stock prices, increasing cost of capital, and increasing risk of bankruptcy or being taken over. When capital markets are efficient, prices (labor, capital, and natural resources) are “correct”, which improves decision making.

Our value-oriented activism requires significant capital, rapid execution and a willingness to drive changes required to improve businesses irrespective of any potential headline risks.

We conduct thorough assessments of target company’s operations, including management, product strategies and capital structure. Our business and financial expertise allows detailed engagement, focusing on strategies to unlock hidden value and eliminate barriers to price discovery by addressing business challenges related to strategy, operations, capital structure and capital expenditure plans.

The traditional private equity model has four basic drivers of value creation. Each of these drivers requires certain risks and a certain skill set and environment to successfully execute. Our team’s transactional experience provides insights on the long-term viability and implementation of potential value-creating initiatives.

Value Creation

Strategic Repositioning

- Identify and pursue acquisitions, dispositions, spin-offs
- Evaluate and restructure capital expenditures

Operational Improvements

- Cost effectiveness & efficiency
- Asset utilization
- Revenue enhancement (pricing, new products, new markets)

Governance Changes

- Ensure qualified and committed board composition
- Strengthen management, if needed
- Improve reporting and committee structures

Financial Restructuring

- Redemptions
- Share buyback programs
- Dividends
- Debt restructurings

Activist Target Financial Results
(Annualized Average Return)


Source: Linklaters (2013)

Appropriate Engagement

Can Achieve Superior Performance


Our constructively firm process is shaped by the fact that a collaborative, negotiated, or settled response to activist engagements tends to lead to higher excess value than a combative one.

WSD Capital ManagementTraditional Private Equity
ObjectiveEnhancing ValueCapturing Value
Preferred Investment Period14 to 48 Months4+ Years
Control AmbitionAims for influence in cooperation with
multiple stakeholders
Total Control
Willingness to Partner with OthersYes, seeks often third-party support and consensusRarely
Tolerance for Negative PublicityHighLow
Predictability of StrategyLow, can be creative and nimbleHigh, due to influence of many constituencies

Governance Improvements

Benefit Workers, Communities and Other Stakeholders


As global markets become more investor friendly, companies can take advantage of the market benefits of instituting improved corporate governance which drives lower costs of capital, higher margins, increased productivity and, in turn, higher multiples.

Also Explore


Privacy Preference Center

      Necessary

      Advertising

      Analytics

      Other