Should Boards Be Wary of Informal Settlements With Shareholder Activists?

Recent, high-profile announcements involving engagement between activist investment firms and their corporate targets have drawn renewed interest in whether a company should consider an informal settlement as a means of resolving an activist campaign instead of a formal, written agreement. Partner Elizabeth Gonzalez-Sussman, of counsel Ron Berenblat and associate Dara Ferguson discuss the potential benefits and risks of informal settlements, and why they work best when boards and management teams prioritize preparedness and engagement.