Activist Investor Discusses Dual-Class, M&A, and Multiple Insurgents

Dual-class share structures are often seen as a shield against activist investors, with the high-vote bloc protecting company boards during proxy battles. However, according to Carmen Lu, a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP specializing in activism defense, it is a mistake to assume that these structures are completely impenetrable.

Lu highlighted the fact that activists have been successful in targeting dual-class companies. This success stems from the diverse objectives that activists may have, which could include profiting from stock price fluctuations without needing majority shareholder support. This flexibility allows activists to navigate around the high-vote bloc and still exert influence within the company.

In addition to discussing the vulnerabilities of dual-class structures, Lu also delved into other areas of activism, such as M&A strategies, white squire defense mechanisms, and the outlook for activism in the tech sector in 2025. She also touched on the challenges that arise when multiple activists converge on a single company, emphasizing the importance of strategic planning and coordination to navigate such situations successfully.

Lu pointed out that while dual-class structures can provide protection, there are instances where the high-vote class is fragmented among multiple holders. In such cases, activists can exploit these divisions by turning high-vote shareholders against each other, effectively neutralizing their power and opening up opportunities for activism.

The discussion with Carmen Lu sheds light on the complexities and nuances of activist investing. It underscores the importance of understanding the different dynamics at play in such scenarios and developing strategic approaches to maximize impact and achieve desired outcomes. Lu’s insights offer valuable perspectives for companies and investors alike to navigate the evolving landscape of activism and corporate governance.

For more insights on activism and related topics, The Deal offers a variety of podcasts on platforms like iTunes, Spotify, and TheDeal.com. These resources provide further depth and analysis on current trends and developments in the world of activist investing, offering valuable perspectives for industry professionals and stakeholders.