Rapid Earnings Expansion:The Best Defense AgainstActivist Investors

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Rapid Earnings Expansion

Source: Capital IQ

Since the beginningof 2016, at least 33activist campaigns have been launchedagainst US companies with more than $1 billionin revenue.

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Rapid Earnings Expansion

Activist investors are a genuine worry for corporatemanagement teams today: More than 70 of the Fortune 500 have atleast 5% ownership byactivist shareholders.

Source: A.T. Kearney Analysis

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Rapid Earnings Expansion

Many activists are makinglarge investments in companies, but thosewith small stakes aresuccessfully influencingeven the largest firms.

Source: JPMorgan Chase

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Rapid Earnings Expansion

Activists are increasingly taking board spots to pushfor 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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Rapid Earnings Expansion

Even companies logging steadyperformance may be targeted by activists. Failing to meet analysts'expectations can be all it takes. This means companies can easilydrift into the activist's bullseye, particularly in times of sluggishrevenue growth.

Source: A.T. Kearney analysis

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Rapid Earnings Expansion

Source: A.T. Kearney analysis

146 of the Fortune 500missed the consensusstreet estimate when reporting their most recent fiscal year earnings.

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Rapid Earnings Expansion

If your company is underperforming, then the conditions may be right for activist investorsto enter the picture and start demanding profit improvementsand fast.

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Rapid Earnings Expansion

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

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Rapid Earnings Expansion

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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Rapid Earnings Expansion

Companies have the ability to improve their resultson their own terms and with urgencybefore activist shareholders begin making their demands.

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Rapid Earnings Expansion

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

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Rapid Earnings Expansion

Rapid Earnings Expansionsets an audacious earningstarget, builds it into the company's forecast, and makes reaching the goal a no-excusesendeavor.

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Rapid Earnings Expansion

The best defense is a good oense. Managementcan pursue Rapid Earnings Expansion to protect againstactivists. The keys: Do it once. Do it big. Do it on your own terms.

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Learn how Rapid Earnings Expansioncan help you chart your own courseagainst activist investors.

A.T. Kearney is a leading global management consulting firm with oices in morethan 40 countries. Since 1926, we have been trusted advisors to the worlds foremostorganizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieveimmediate impact and growing advantage on their most mission-critical issues.For more information, visit www.atkearney.com.

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