We're a top investor relations firm and one of us spent over a decade on the inside. Here's what boards need to know. | Fortune

"In these moments, it's easy for Boards to slip into self-preservation mode and engage in standard defensive tactics. However, many of these well-advised tactics may jeopardize trust with the activist and ultimately reduce the company's negotiating leverage. Rather than establishing the basis for a thoughtful exchange of ideas, some standard defense tactics can inadvertently signal resistance and bad intentions, making it more difficult to maintain a constructive dialogue that could lead to a mutually beneficial outcome."

"Approaching meetings strictly as 'listen only' sessions, thereby preventing an intelligent exchange of ideas. Advisors may recommend that their clients engage in this approach to mitigate risk and better understand the activist's objectives to get ahead of their demands. This can lead to frustration among activists, who may feel the engagement lacks genuine dialogue, which may lead the activist to make their concerns public."

"Slow-rolling discussions to delay meaningful engagement until after a key calendar event or the nomination or record dates. Activists recognize these delay tactics immediately, viewing them as an attempt to run out the clock and avoid accountability."

When activist investors emerge as major shareholders, boards typically respond with defensive strategies advised by professional advisors. However, many conventional defense tactics inadvertently undermine constructive dialogue and mutual benefit. Common counterproductive approaches include conducting meetings as listen-only sessions that prevent genuine exchange of ideas, and slow-rolling discussions to delay engagement past key calendar events. These tactics signal resistance and bad intentions to activists, who recognize delay strategies immediately. Rather than establishing thoughtful communication, such defensive postures frustrate activists and may prompt them to escalate concerns publicly. Understanding how defensive actions are perceived by activists helps boards maintain negotiating leverage and pursue mutually beneficial outcomes through genuine engagement.

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