Transcription
As the U.S. presidential inauguration approaches, many high-profile activist investors are eagerly awaiting Trump 2.0. Corporate advocacy expert Kai Liekefett explains why so many activist investors supported Trump’s election campaign; what the Trump White House, SEC and FTC mean for shareholder activism and the M&A market; and what that means for the 2025 proxy season.
World Finance: Kai, even if not all activist investors supported Trump’s election, why would those who did welcome his presidency in terms of policy?
Kai Liekefett: Well, there are three main reasons, Paul. First: it’s taxes, it’s all about taxes. Trump, in his first administration, passed massive tax cuts that expire at the end of 2025. And activist investors — like many other investors — are hoping those tax cuts will be extended.
The second reason is deregulation. Trump was campaigning on a promise to deregulate America, and the hope, generally speaking, is that deregulation will lead to more economic growth.
And the third problem is a little more complicated: it concerns prices. As you may know, tariffs have been threatened by Trump all over the world, starting with Canada and Mexico. And some activist investors that I’ve spoken with tell me that, look, these tariffs could cause a market disruption – that wouldn’t necessarily be bad for us activists, because it would cause a market disruption that we could exploit.
World Finance: The man himself is impressionable to say the least. How friendly will the Trump White House be to activist influence?
Kai Liekefett: There are a number of activists close to Trump who will certainly try to influence him. Starting with Nelson Peltz, who made a significant donation to his campaign. Paul Singer, founder of Elliott, probably America’s most sophisticated and best activist. Dan Loeb from Third Point, Bill Ackman from Pershing Square and of course Carl Icahn.
However, under the first Trump administration, the SEC was actually more business-friendly. He proposed regulation of proxy advisory firms like ISS and Glass Lewis, which was welcomed by corporate America. The Trump SEC also strengthened requirements for small shareholders to submit non-binding shareholder proposals. From the company’s perspective, it’s not necessarily bad news that Trump was elected; The new SEC Commissioner, Paul Atkins, is widely regarded as an excellent, very impartial lawyer, and is likely to return the SEC’s focus to what it once was, namely protecting investors and financial markets.
World Finance: We will also see a significant shift in the FTC’s approach to mergers and acquisitions and the enforcement of antitrust laws. What is the story here?
Kai Liekefett: The Biden administration has been extremely hostile to mergers in terms of antitrust enforcement. Many constituencies on Wall Street, but also on Main Street, were extremely unhappy with the way the Biden administration discouraged mergers and acquisitions.
Today, Trump has already announced replacements for the leadership of the FTC as well as the DOJ’s antitrust division. And these replacements are seen as a return to normal. And this is also important for activists, because the first exit opportunity for an activist is merger and acquisition. Activists typically try to push companies to sell – particularly targeting small and mid-cap companies. Mergers and acquisitions are therefore essential for activists, who are eager to return to a liquid M&A market.
World Finance: So what is the time frame for that? Should companies prepare for a disruptive proxy season?
Kai Liekefett: Absolutely. Activists were champing at the bit, popping champagne when Trump was elected. We can already see it! Activists from the left and right are reaching out to businesses in the United States and abroad. And businesses need to buckle down and prepare. It is much less expensive to prepare and avoid activism than to run an activist campaign. So it’s time to get ready.