Almost every dispute between a public company and its shareholders stems from a belief that one or more of the constituents is not acting in the corporation’s best interest. Whether an activist argues that management and the board are only interested in lining their pockets, or management claims that an activist has only purchased—or shorted—the stock to make a quick buck, or a financial or strategic buyer suggests the company is best served by selling itself or its assets, the core of their successful argument relies on facts.
Since the 1980s, when Jules Kroll pioneered the use of investigators as an effective means of combatting corporate raiders, K2 Integrity’s senior practitioners have been refining and innovating the sources and methods used to develop actionable information and working with clients to develop the strategy, tactics, and timing to deploy it.
Today, stakeholders come armed with more effective weapons, and battles can range across time zones, countries, and continents. With more than a century of combined experience among the leaders of this practice, the K2 Integrity team uses its unparalleled expertise to work with a broad range of stakeholders in order to develop sophisticated, timely, and actionable information.
Clients use K2 Integrity and our findings to develop long term strategy and inform short-term tactics both before and during a campaign to:
- Create a pre-engagement plan or update a response plan
- Inform various constituents including management, legal counsel, board committees, or dissidents before or during an activist situation
- Identify misstatements or inaccuracies or add credence to an argument
- Support or modify the legal or operational goals of a campaign
For instance, understanding how an activist has behaved in the past may inform management’s interactions with them, including whether to cooperate or capitulate. Similarly, determining how a company or its board members have reacted to pressure in the past may provide insight to a dissident about how best to engage with the company’s board.
Knowing that an activist has a poor track record or has investments that might cause a conflict of interest, provides ammunition for a company to rebuff unwanted overtures, while strategically employing evidence indicating senior executives have misused corporate assets might cause a dissident to score a quick win at little cost to stakeholders.
Working in coordination with the client and senior advisors, K2 Integrity customizes every investigation, often adapting as the project evolves. At the start of the investigation we are often asked to:
- Assess the vulnerabilities of the client
- Investigate the background of sitting or proposed directors to identify material misstatements, omissions, or undisclosed business relationships that would raise issues regarding their suitability to serve as a steward of the company
- Analyze relationships among a slate of directors that would call into question their independence from each other, if not the company itself
- Assess the veracity of claims made by either side in a dispute and developing information that supports a timely response
- Determine the efficacy of the client’s security (cyber and other) measures
- Provide strategic alternatives for either side to successfully end the dispute
While findings from these tactics can serve as a jumping off point for additional avenues for investigation, they also have a direct impact on the outcome of the situation as a whole.