A recession nearly always heats up M&A as valuations tumble, along with share prices, and acquirers go shopping for great buys. When that happens, you can count on at least some activist investors to apply pressure to mid-sized companies to sell to big behemoths with deep pockets.
For some companies, selling makes strategic sense. But those for those CEOs who, after careful consideration, determine that a sale would not be in the best interest of shareholders, resistance is worthwhile.
The key to making a successful stand against that pressure is a good, close relationship with the board, says Don Knauss, whose experience fending off Carl Icahn during the Great Recession holds valuable lessons for today. “This was back before everyone was getting bombarded by activists,” he recalls. “Everybody said, ‘Why the hell is Carl Icahn going after Clorox? It’s a well-run company.’
“But it wasn’t a matter of being well run. Carl Icahn’s vision was that, if you’re the best mid-sized asset left standing, you just need to sell yourself to one of the big guys—Procter & Gamble, Kimberly Clark, etc.,” says Knauss. “My position to him was, we’ve got a strategy and we’re not changing that. If any of those companies want to buy us, they know my telephone number. They can call me, but I’m not going to start a process just because you think I should.”
The board formed a subcommittee to help Knauss field the Icahn offers and ultimately, to respond to the proxy fight when Icahn attempted to replace the board and sell shareholders on the deal. During that time, Icahn sweetened the offer several times, getting as high as $80 a share at a time when Clorox’s stock, then in the mid-$60s, had been relatively flat through the recession, like most other CPG companies.
That might have been tempting to the board, says Knauss, if he hadn’t maintained a practice of engaging the board deeply in strategy. “So because of that, they believed in the strategy and they believed it would do a better job of generating shareholder wealth over time.”
As a result, Icahn couldn’t get traction with either the board or the shareholders and in September of 2011, he dropped his bid for control.
Knauss and the board were ultimately proven right. By September 2014, with the country still limping out of its slump, Clorox stock had risen to over $90 a share.
Today, it’s worth $235.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
