Changing Seasons: M&A Winter Becomes Activist Summer

2025 was widely expected to be the year that M&A would make its comeback, with pent up investor demand and dry capital finally being put back to work after a long hiatus. However, a combination of higher-for-longer interest rates, geopolitical uncertainty and changing tariff regimes have prolonged the multi-year “M&A winter.” 

The slowdown in M&A—and, in turn, the loss of one pathway to create shareholder value—is forcing investors to look at other ways to maximize value, such as reviewing companies’ operations and governance structures. When investors discover misalignment between a company’s share price and what they perceive its true value to be, they will often launch an activist campaign to force change within an organization—typically through acquiring seats on a company’s board of directors.  

Last year saw a record number of such campaigns—243 in total according to Barclays. And, while it’s still early days, campaigns in 2025 are already on track to surpass that amount.  

Harvard Law School’s Forum on Corporate Governance notes that there was a 43% rise in activist attacks in Q1 of this year compared to Q1 2024. The forum also notes that activists have been more successful in getting board seats this year, as they secured 51 seats in the first quarter, a 31% increase from Q1 2024.  

Lastly, and most significantly, activists are now launching a broader range of campaigns that go beyond the historic approach of M&A-driven investment themes.  

Traditionally, proposed acquisitions or divestments were the main drivers for activist bids as investors thought a company could be worth more if it simply bought or sold portions of its business. 

However, in recent years, activists have been less motivated by conventional financial metrics and more so by what they view as governance lapses. Rather than take issue with a company’s financial performance, investors will now directly attack its CEO or board members and demand changes to its corporate strategy and leadership. 

The strategy is working, as last year a record number of CEOs were ousted in such attacks, according to Reuters.  

Stakeholders’ governance demands and expectations of the board are also changing. For example, the number of anti-ESG proposals targeting companies in the Russell 3000 Index more than quadrupled compared to four years ago, according to The Conference Board—a stark reversal from the pro-ESG activist movement that defined boardroom debates in recent years.  

As business leaders navigate unprecedented economic uncertainty and stock market volatility in 2025, they need to be aware of the risks that activists pose to their businesses and plan accordingly. They can start by doing the following:   

1. Communicate corporate governance strength: Organizations must communicate their commitment to governance, whether it’s their board composition, internal controls, financial management or corporate strategy. This is essential in building trust with their investor base during uncertain times.
2. Proactively engage the investor base: Business leaders must listen to their shareholders’ feedback and prove that their priorities align with their investors. This goes beyond communicating during the usual moments such as earnings season or investor days. As the market is forward-looking, companies need to articulate what they plan to do for shareholders tomorrow rather than what they’ve done to date.  
3. Formulate a clear ESG position: With pro- and anti-ESG movements growing in popularity and impacting investment decisions of major asset managers, c-suites and boards risk being caught in the crossfire of opposing ideologies. Business leaders will need to clearly communicate their position on ESG with this in mind.  
4. Evaluate potential weak spots and defense needs: Organizations must determine if their board composition, financial performance, governance controls, corporate strategy, peer group performance or other factors put them at risk for an attack. It is important to be proactive and develop a response strategy in anticipation of a potential market reaction to any issues.
5. Engage advisors ahead of time: Decision makers must evaluate which legal, financial and communications advisors are right for their business before a campaign unfolds. Every activist situation is unique so they must be sure that their external advisors truly understand their business and are best equipped to provide counsel through highly public, market sensitive moments. 

With M&A winter showing no sign of letting up, business leaders need to prepare now for what could be a very long activist summer.