Editor’s Note: Martin Lipton
is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on a Wachtell Lipton memorandum by Mr. Lipton, Steven A. Rosenblum
, and Sabastian V. Niles
. Wachtell Lipton’s earlier memorandum on current thoughts on activism is available here
, their earlier memoranda criticizing an empirical study by Bebchuk, Brav and Jiang on the long-term effects of hedge fund activism are available here
, and their earlier memoranda
criticizing the Shareholder Rights Project are available here
. The Bebchuk-Brav-Jiang study is available here
, Lucian Bebchuk’s earlier response to the criticism of the Shareholder Rights Project is available here
, and the Bebchuk-Brav-Jiang responses to the Wachtell Lipton criticisms of their study are available here
We published this post last August. Since then there have been several developments that prompt us to revisit it; adding the first three paragraphs below.
First, Delaware Supreme Court Chief Justice Leo E. Strine, Jr. published a brilliant article in the Columbia Law Review, Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the Dueling Ideological Mythologists of Corporate Law in which he points out the serious defects in allowing short-term investors to override carefully considered judgments of the boards of directors of public corporations. Chief Justice Strine rejects the argument of the academic activists and activist hedge funds that shareholders should have the unfettered right to force corporations to maximize shareholder value in the short run. We embrace Chief Justice Strine’s reasoning and conclusions.
…continue reading: Current Thoughts About Activism, Revisited