By Svea Herbst-Bayliss
NEW YORK, Jan 20 (Reuters) - Corporate agitators who patiently prodded companies for changes last year will not be as nice in 2026.
Activist investors are planning to push more companies
to sell or break up this year as deal activity heats up and opens a faster – and more profitable – way to realize gains, according to a dozen bankers, lawyers and investors who spoke to Reuters.
The trend became visible last year after more than half, or 54%, of all activist campaigns launched in the second half of 2025 pressured companies to sell. That is up from the first half when only 35% of campaigns included demands for M&A, data from Barclays shows.
"M&A is a big theme these days and we are seeing activist investors trying to catalyze more mergers and acquisitions," said Amy Lissauer, global head of activism and raid defense at Bank of America.
OUTSIZED RETURNS
Company sales and even speculation about possible M&A helped Anson Funds, which often takes positions in companies and then pushes for changes including mergers or acquisitions, deliver a 21.2% gain for its investors last year, one investor said, outperforming both the broader S&P 500 Index and many of its activist peers.
Lionsgate Studios, where Anson has been pushing for a sale since 2024, rallied as Warner Bros Discovery, a separate film and TV studio, began exploring a sale of all or some of its holdings late last year.
Canadian rental housing owner InterRent REIT, which Anson also urged to sell itself, was acquired by a consortium of CLV Group and Singapore's sovereign wealth fund GIC in early 2025.
Then late in the year, news that Abu Dhabi's Mubadala Capital was considering buying Clear Channel Outdoor helped contribute more gains after Anson along with other activists had long pushed for a sale.
Though a deal was not announced, Clear Channel's shares shot up by about 20% the next day and are currently up by about 51% since the Mubadala news emerged.
On average, activist investors returned 13.4% last year, Hedge Fund Research data shows, making activism one of the most profitable hedge fund strategies tracked by the firm. The S&P 500 gained 17.9%, including dividends, last year.
While a handful of activists could brag about their double-digit returns, others had middling or even disappointing years, investors said, adding that these portfolio managers now face fresh pressure to deliver better performance to satisfy impatient investors.
SMALL- AND MID-CAP OPPORTUNITIES
The booming M&A market, which just clocked its second-best year on record with $5.1 trillion in deals signed in 2025 thanks largely to megadeals, is expected to trickle down to smaller companies. Activists perceive an opportunity to make more money by pushing for sales of mid-cap and small-cap companies and as private equity firms look to take more publicly traded ones private, said Jim Rossman, global head of shareholder advisory at Barclays.
"The activist's tool kit is now wide open for 2026," he said.
Experienced activists as well as newcomers are ready to push for even more action, certain this is the fastest and most lucrative path to eye-popping returns, bankers, lawyers and investors added.
Earlier this month, software maker BlackLine's stock price jumped 2.4% after Reuters reported that activist Engaged Capital is planning to try to replace board directors amid criticism from the firm that the company has not yet reached a deal to sell itself even after interest from a large rival.
Starboard Value, one of the industry's busiest activists, late last year pushed technology company Clearwater Analytics to sell itself when its shares were trading around $21.76 in early December. Almost two weeks later, private equity firms led by Permira and Warburg Pincus announced plans to buy it for $8.4 billion. Its shares are currently trading above $24.
'PLAN A'
Kenvue investors, including activists Toms Capital and Third Point, long urged the Tylenol and Band-Aid maker to sell itself before a deal was made with Kleenex maker Kimberly-Clark in early November. At least one activist planned to launch a proxy fight at Kenvue if there was no movement on a sale, a person familiar with the matter said.
Kenvue's stock price has jumped some 20% since news of the planned sale.
The hedge funds either declined to comment or did not respond to requests for comment on their strategies and performance.
"Plan A is always for M&A because breaking up a company, or better yet selling it, has the potential to bring in a lot more money than anything else the activist may have planned," said Kai Liekefett, co-chair of law firm Sidley Austin's shareholder activism and corporate defense practice.
Looking ahead, bankers and lawyers said they are expecting more, noting this means more activism campaigns generally as well as the push for companies to pursue deals within those campaigns.
"Improving M&A conditions (are) creating viable opportunities for transactional-related activism," Lazard bankers wrote in their 2025 report about key trends to watch.
(Reporting by Svea Herbst-Bayliss in New York; Editing by Dawn Kopecki and Matthew Lewis)
