As Global Head of Research & Leadership Advisory at JRG Partners, this is one of the questions employers bring me most often, and my answer has been sharpened by seeing what separates the searches that succeed from the ones that don’t. Companies tend to think about activist investors only once one shows up, by which point their options have narrowed. The smarter posture is to think about it before. Certain leadership and governance moves preempt activist pressure by removing the vulnerabilities activists exploit, and companies that build strong leadership and governance proactively are far less likely to attract an activist in the first place.
Key Takeaways
- Companies often think about activists only once one appears, when options have narrowed.
- Certain leadership and governance moves preempt activist pressure proactively.
- Activists exploit vulnerabilities: underperformance, weak governance, and leadership gaps.
- Strong leadership, governance, and performance reduce activist vulnerability.
- Preempting the threat proactively beats reacting once an activist has arrived.
The Reactive Trap
Companies typically engage with the activist threat reactively, thinking about it seriously only once an activist has taken a position and is applying pressure. By then, options are narrower, the company is on the defensive, and the activist has already identified the vulnerabilities they intend to exploit. The reactive posture cedes the initiative. A smarter approach considers activist vulnerability proactively, taking the leadership and governance steps that reduce the vulnerabilities activists target, before an activist arrives to exploit them.
What Activists Exploit
Activists target vulnerabilities: sustained underperformance relative to potential, weak or complacent governance, leadership gaps or entrenchment, and strategic drift, situations where they can argue the company is underperforming and that change would unlock value. Understanding what activists exploit is the key to preempting them: a company that lacks these vulnerabilities, that performs well, is governed strongly, and is led capably, offers activists far less to attack. The vulnerabilities are the target, and reducing them is the preemption.
Leadership and Governance as Preemption
Strong leadership and governance directly reduce activist vulnerability. Capable, performing leadership removes the underperformance and leadership-gap arguments activists use; strong, independent, engaged governance removes the weak-governance vulnerability; and a clear, well-executed strategy removes the drift narrative. Companies that build these proactively, strong leadership, robust governance, clear strategy, present a hard target, one where an activist would struggle to make the case that change is needed. Leadership and governance moves are thus a primary means of preempting activist pressure.
Proactive Moves That Preempt
Specific proactive moves preempt activist pressure: ensuring leadership is strong and performing (addressing gaps or underperformance before an activist points them out), strengthening governance (independent, engaged directors and sound practices), maintaining strong performance and a clear strategy, and addressing the vulnerabilities an activist would target before they can. These moves, made proactively, both reduce the likelihood of attracting an activist and strengthen the company’s position if one appears. They are good governance in their own right, with activist preemption as a benefit.
Preempting Beats Reacting
The broader lesson is that preempting the activist threat, by building strong leadership and governance and addressing vulnerabilities proactively, is far better than reacting once an activist has arrived. A company that has done this is less likely to attract an activist and better positioned if one comes; a company that waits is on the defensive with narrowed options. Thinking about activist vulnerability proactively, and taking the leadership and governance steps that reduce it, is a mark of well-governed companies, and it turns the activist threat from a crisis to react to into a vulnerability to have already addressed.
What This Looks Like in Practice
In practice, preempting the activist threat means proactively addressing the vulnerabilities activists exploit: ensuring leadership is strong and performing, strengthening governance with independent, engaged directors and sound practices, maintaining strong performance and a clear strategy, and fixing gaps before an activist points them out. A company that does this presents a hard target, less likely to attract an activist and better positioned if one appears, and these moves are good governance regardless. The proactive posture replaces the reactive scramble that leaves companies on the defensive.
The Mistake Employers Keep Making
The mistake is engaging with the activist threat only reactively, once an activist has taken a position and identified the vulnerabilities to exploit, when options have narrowed and the company is on the defensive. Companies that wait cede the initiative. The fix is preempting proactively, building strong leadership and governance and addressing the vulnerabilities activists target, underperformance, weak governance, leadership gaps, before an activist arrives to exploit them.
The Bottom Line
Certain leadership and governance moves, strong performing leadership, robust governance, clear strategy, preempt activist pressure by removing the vulnerabilities activists exploit, and companies that build these proactively are far less likely to attract an activist and better positioned if one appears than those who react only once the threat has arrived. None of this is complicated, but it is uncommon, and that gap is precisely where the advantage lies for employers willing to do the work.
Related Reading
For employers going deeper, see Exit-Ready Leadership, The CEO Evaluation, Governance for Growth.
Frequently Asked Questions
- Q: How do you preempt activist investors?
- A: By proactively addressing the vulnerabilities activists exploit, underperformance, weak governance, leadership gaps, through strong leadership, robust governance, and clear strategy.
- Q: What do activists exploit?
- A: Sustained underperformance, weak or complacent governance, leadership gaps or entrenchment, and strategic drift, situations where they can argue change would unlock value.
- Q: How do leadership and governance preempt activists?
- A: Strong, performing leadership and robust governance remove the underperformance, leadership-gap, and weak-governance arguments activists use, presenting a hard target.
- Q: Why is preempting better than reacting?
- A: Because reacting once an activist has arrived leaves the company on the defensive with narrowed options, while preempting reduces the likelihood of attracting one.
- Q: Are activist-preemption moves just for defense?
- A: No; they are good governance in their own right, strong leadership, governance, and strategy, with reduced activist vulnerability as a benefit.
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Tanya Gallardo
Managing Director, Executive Search & AI Talent Strategy
Tanya Gallardo is the Managing Director of Executive Search & AI Talent Strategy at JRG Partners, leading C-suite and Board engagements across key growth sectors including Technology, Financial Services, and Manufacturing.
With over 18 years of experience specializing in disruptive technology leadership, Tanya is recognized as a leading authority on talent architecture for future-focused executive roles, such as the Chief AI Officer (CAIO) and Chief Digital Officer (CDO). Her expertise lies in accurately assessing the cultural fit and technical depth required to ensure a high return on investment (ROI) for critical leadership appointments.
Prior to her role at JRG Partners, Tanya held senior roles directing global talent acquisition strategies at a major publicly-traded technology firm, advising on organizational design and succession planning for emerging executive functions. She is a recognized speaker and contributor to industry events, sharing data-driven insights on executive compensation, leadership development, and the measurable business impact of C-suite talent.
