Our latest playbook explores key drivers of corporate separations, why SpinCos attract activist investors, and how companies can prepare defense strategies. 

Corporate Separations in an Activist Era

"Pursuing Separations in an Activist Era"

Pursuing Separations in an Activist Era

"Corporate separation activity continues to accelerate globally as companies highlight undervalued assets, separate divergent businesses, and sharpen geographic focus. The ensuing wave of new public market SpinCos has provided fertile ground for activists. Since 2014, one in four* US SpinCos with a $1bn+ market capitalization have faced public activism campaigns within three years of going public.&nbsp;\r\n<h3>Our latest playbook discusses key drivers of corporate separations and how companies can proactively prepare defense strategies.</h3>\r\n"

Corporate separation activity continues to accelerate globally as companies highlight undervalued assets, separate divergent businesses, and sharpen geographic focus. The ensuing wave of new public market SpinCos has provided fertile ground for activists. Since 2014, one in four* US SpinCos with a $1bn+ market capitalization have faced public activism campaigns within three years of going public.&nbsp;
<h3>Our latest playbook discusses key drivers of corporate separations and how companies can proactively prepare defense strategies.</h3>

textSubtitle02Medium

webcmsMigrated

"textSubtitle02Medium"

"webcmsMigrated"

"Why are New SpinCos Attractive Activist Targets?"

More than 80%** of SpinCo CEOs are promoted internally and may lack experience in managing a standalone public company. This transition leaves them vulnerable to activist activity, especially while the ParentCo's priorities are split between managing the public market vulnerabilities of potentially higher-leverage SpinCos, and maximizing cash proceeds for their own capital structure.

New Management and Balance Sheet 

SpinCos generally deliver strong returns, but those that underperform in their first year as independent companies are more likely to attract activist investors that see an opportunity to push for change.

Early Underperformance 

In a separation, the distribution of SpinCo shares to ParentCo shareholders typically results in a 50%*** turnover rate during the first four quarters post-separation. Activists can capitalize on price volatility to acquire or increase stakes, even as increasingly larger SpinCos are spun out of mega-cap companies.

Position Building 

Why are New SpinCos Attractive Activist Targets?

*Source: FactSet, Deal Point Data, Diligent Market Intelligence, Goldman Sachs internal analytics, public filings
**“Strategies for Successful Corporate Separations,” Goldman Sachs and EY, May 2023
***LSEG

"*Source: FactSet, Deal Point Data, Diligent Market Intelligence, Goldman Sachs internal analytics, public filings\r\n**“Strategies for Successful Corporate Separations,” Goldman Sachs and EY, May 2023\r\n***LSEG\r\n"

Pie chart showing prevalence of M&A demands since 2016: US M&A-Related Campaigns 38% while All Other US Campaigns are 62%. Bar graph showing that US activism campaign activity remains elevated: 2016-2021 Average 96 while the 2022-2024 Average is 119, a 24% increase. 

"Pie chart showing prevalence of M&A demands since 2016: US M&A-Related Campaigns 38% while All Other US Campaigns are 62%. Bar graph showing that US activism campaign activity remains elevated: 2016-2021 Average 96 while the 2022-2024 Average is 119, a 24% increase. "

"A structured, thoughtful separation at both ParentCo and SpinCo, implementation of activism defense best practices, and the right team of advisors are critical for a successful transaction over the long-term."

A structured, thoughtful separation at both ParentCo and SpinCo, implementation of activism defense best practices, and the right team of advisors are critical for a successful transaction over the long-term.

Accessibility Notice:&nbsp;A&nbsp;<a href="/transcript-requests">transcript is available&nbsp;</a>for any video on this page.