Activism in 2026 was cautious. The activism landscape saw the expansion of certain strategies and the contraction of others, with investors adapting to a volatile backdrop. As the market whipsawed, geopolitics suffered from conflict, inflation- and trade-related uncertainty persisted, and AI sparked performance dispersion, activists retreated from big-ticket proxy fights and governance-centric campaigns, instead intensifying strategic and operational initiatives at their portfolio companies.
Over the course of the 2026 proxy season at Russell 3000 companies, only one contested election where the activist was seeking board representation resulted in a seat. More narrowly, no “blue-chip” activist ran a fight during the season and ballot box activism chilled around ongoing universal proxy rule disappointment for investors, voting fragmentation, and deepening attempts to regulate the investment community.
The limited proxy contest environment correlated with an expansive downturn in campaigns driving boardroom reconstitution. During the 2026 season, companies enjoyed a more than 37% decrease in engagements – and a nearly 30% drop in formal settlements – that resulted in an activist designee being seated relative to the same period in 2025. Notably, withhold (or “vote no”) campaigns remained an attractive tool for activists looking for a low-cost, high-efficacy method to accomplish board-level turnover or create director-focused tension. In addition, companies with significant insider ownership and multi-class capital structures – issuers once thought to be less susceptible to activism – became increasingly popular targets.
The absence of activism-driven board change does not mean that engaged shareholders sat on the sidelines this year. Activism levels continued to hover around their elevated 10-year average, with companies holding a market capitalization of $2 billion or less continuing their historical trend of being the most targeted cohort. Issuers in the technology and industrials sectors experienced record concentration of campaign activity through the season, and larger companies seemed to take note, as directors with technology, telecommunications, industrial and manufacturing backgrounds represented 34% of new S&P 500 directors joining through the 2026 proxy season.
In our annual review that follows, we discuss core developments in shareholder activism in 2026 and offer perspectives on what to expect in 2027.
Activists ride the AI wave
AI rolls through all things, including activism. In 2026, activists matured campaign themes involving AI as they became more capable of identifying and articulating AI-related opportunities at their target companies. And while the relationship between activism and AI is not new, activists increasingly advanced focused AI themes and mobilized them in support of their campaigns for change during the past year.
Central to the activist AI thesis was the concept of adoption. Engaged shareholders cautioned companies against failing to develop a credible AI plan, mismanaging AI risk and squandering advantaged market positions, or missing out on the AI boom. Investors urged companies to deploy AI as a means of cutting costs, improving profitability and staying competitive. They also implored companies to improve the clarity of their AI narrative.
AI served as a force multiplier for activists agitating for capital allocation enhancements. On the AI platform, investors buttressed their arguments around the timeliness and utility of new, upsized or accelerated buybacks and dividends. More precisely, activists submitted that, because AI can reduce costs, generate cash and expand margins, companies will experience improved financial performance that leads to additional opportunities to return capital to shareholders.
As the AI wave hurtles into 2027, we expect the bond between activists and AI to strengthen. Massive AI-related capital expenditures and the uptick in AI-linked deal activity and capital formation will present activists with the opportunity to ask new questions of their portfolio companies. For some companies, activists will ask why they’ve been left behind and what their AI plan is, and to explain how they intend to stay competitive in an AI-enabled business world. For others, activists will begin to hold boards and management teams accountable for AI spending that has yet to drive demonstrable shareholder value or push corporate leaders to articulate a reasonable timeline for returns.
Further, the market has started to select AI achievers and nonachievers. With respect to the latter category, we expect them to be vulnerable to activism going forward – either because they failed to capably participate in the AI race or because they ran and stumbled. Investors will pursue board change and management turnover perceived as necessary for the right AI playbook, urge companies to sell themselves to avoid further headwinds, and, in some cases, demand that they scale back their investments in AI (or products where AI lowers the barrier to entry), particularly where AI can lead to reduced moat size and make differentiation more difficult.
One final note on AI and activism: Short sellers have turned their attention to companies that are at risk of AI-induced obsolescence or new frontiers of AI-generated competition. Where companies produce products that can be substantially replicated, or otherwise impaired, by AI, the shorts are shining a spotlight on that vulnerability and predicting share price declines. Short sellers are also singling out issuers that stand to face increased competitive pressure from better-resourced industry participants, AI-native startups, open-source models and leading AI labs.
To address AI’s increasing entanglement with activism, boards and management teams should stress test their AI strategy and strengthen the quality of their AI narrative. Companies that face the potential weakening of their businesses must, among other things, consider ways to focus investor messaging in a manner that capably communicates their value creation story for the AI revolution and beyond.
More activists read the private equity playbook
Activist hedge funds and private equity firms share fundamental similarities – and the line between them has blurred, as each has adopted the other’s tactics. When a company is underperforming or misunderstood by the market, it is often seen as an opportunity for both activist engagement and private equity investment. This convergence is logical. Activists and private equity firms are ultimately value investors, and certain qualities that make a company an attractive target for activism are not dissimilar to those that might drive a go-private transaction.
Well-capitalized activists, like Carl Icahn, Elliott, Pershing Square and Trian, have demonstrated their willingness and ability to take their portfolio companies private. In some cases, activists have partnered with private equity funds to form formidable buyer consortiums. In others, they have signed the check themselves, including in multibillion-dollar transactions.
This year, activists with fewer assets under management ventured into private-equity-style go-private transactions involving their portfolio companies. This was particularly true during the first half of 2026, as the M&A market was meaningfully bifurcated. While large capitalization companies enjoyed relatively smooth dealmaking terrain, the middle market was less active. As a result, activists attempted to nudge their smaller portfolio companies into dealmaking – at times, coupling traditional activist tactics, such as public pressure campaigns and proxy contests, with proposals to acquire their target.
Among this year’s class of activists seeking to use the private equity blueprint were Icahn, Irenic Capital Management, and Ancora Holdings, which pursued transactions involving Caesars Entertainment, Reservoir Media and H.B. Fuller, respectively. But two engagements from 2026 illustrate the dynamism of these matters, including at the smaller end of the market capitalization scale.
First, in February, The Donerail Group submitted an unsolicited, nonbinding indication of interest to acquire MarineMax, a marina operator, superyacht services company, and boat and yacht retailer. The $35 per-share all-cash proposal represented a nearly 30% unaffected premium. Donerail, “in response to media speculation,” publicly confirmed its proposal through a press release that also disclosed a more than 4% ownership stake in the company. The activist also publicized that, in November 2025, it had submitted notice of its intent to nominate three individuals for election to the MarineMax board, only to have its submission subsequently invalidated. Within a week of the release, Donerail published an open letter to shareholders, urging them to vote against the election of MarineMax’s CEO as a director at the company’s 2026 annual meeting. After all of MarineMax’s nominees were elected at the meeting, the company announced a new share repurchase program in March. Five months later, MarineMax agreed to be acquired by a Blackstone Infrastructure portfolio company, Safe Harbor, in a $53 per-share all-cash transaction that represented in excess of a 96% unaffected premium.
Second, in April, an investor group led by Bradley Radoff and Michael Torok disclosed a letter to the board of Seer, a proteomic product developer, in which it submitted a nonbinding proposal to acquire the company for $2.25 per share in cash. The proposal represented a 33% premium to the company’s then-most recent closing price, plus a contingent value right that represented the right for Seer shareholders to receive 80% of the net proceeds received from any license, sale or other disposition of the company’s business and assets.
The letter also pursued an activist angle. Radoff and Torok indicated that they owned 7.6% of Seer’s outstanding shares, declared that the company needed new leadership, and publicized that they had submitted notice of their intent to nominate three individuals for election to the company’s board at the 2026 annual meeting.
Over the ensuing months, Radoff and Torok pursued a dual-track process. On multiple occasions, they increased their offer to acquire Seer. In parallel, they pursued their proxy contest but failed to secure the election of any of their nominees, despite two of their candidates receiving support from both ISS and Glass Lewis.
A few weeks before the company’s annual meeting, a bidding war for Seer commenced, with Seer’s CEO submitting his own proposal to acquire the company for $2.45 per share in cash plus two separate contingent value rights linked to certain revenue and disposition milestones. In response, Seer’s board established a special committee to evaluate the proposal and other alternatives. After the committee rejected the CEO’s initial proposal, he increased his offer to deliver aggregate value of $7.69 per share to Seer’s shareholders.
On October 29, 2026, following a three-month strategic review, the special committee of Seer’s board of directors rejected both (i) Radoff and Torok’s proposal and (ii) the CEO’s proposal, concluding that neither adequately reflected the company’s intrinsic value and that remaining an independent public company was in Seer’s best interests.
In 2027 and beyond, we wouldn’t be surprised to see more activists pursuing private-equity-style transactions (or more private equity firms trying their hand at a tailored brand of M&A-focused activism). Activists that publicize unsolicited acquisition proposals have various motivations. Going public can serve to put a company in play, inject life into a stock and spur a target to explore, or accelerate, a review of strategic alternatives. It also applies enhanced execution pressure to management teams and complicates board-level engagement dynamics, as directors toggle between dealing with an activist and managing a potentially unwanted acquirer. Accordingly, when a company receives an acquisition proposal from an activist, it is essential that the board is deliberate and diligent in its assessment of whether they are interacting with a credible buyer or an investor attempting to stimulate a sale process.
Informal settlements on the rise
With the objective of shifting away from cumbersome and expensive engagements, investors and boards continue to innovate around one of the most familiar and present concepts in activism: settlement. Historically, substantial activist campaigns have been resolved by means of a formal settlement agreement (or “cooperation agreement”) that, among other things, contains operational, strategic and/or governance obligations running to a company and standstill and voting obligations running to an activist.
This year, activists and boards pushed to resolve engagements more efficiently, seeking mutually agreeable outcomes that minimized cost, distraction and reciprocal risk. In doing so, investors – especially well-known, repeat activists – and issuers tried on informal settlements.
Informal settlements are typically memorialized through a press release where a company commits to select actions and an activist provides a supporting statement. Given the absence of a written agreement, neither the company nor the activist can avail itself of contractual remedies if the other party fails to follow through. Informal settlements, in turn, are built on credibility, trust and reputational incentives.
For companies, taking a commitment to market and failing to realize it invites scrutiny from myriad sources, including shareholders, regulators, the media and, of course, activists that wish to capitalize on self-inflicted shortcomings. For activists, the availability of an informal settlement requires a track record of relevant trustworthiness – either with the target company or as a recurring activist whose business model is dependent on maintaining credibility within the broader investment community. Activists that make pacts with companies only to break them jeopardize their ability to drive negotiated change (including during future engagements with other issuers) and erode their standing with investors on whom they rely to plausibly threaten a contested election.
Elliott Investment Management reached informal resolutions with The J.M. Smucker Co., Phillips 66, Dexcom and Align Technology in the first seven months of 2026 alone. Across these engagements, Elliott introduced a total of nine new directors, reconstituted a board committee and expanded the committee’s mandate, catalyzed the launch of a strategic and operating model review, and saw the upsizing of a share repurchase program – all without becoming subject to contractual standstill obligations or voting commitments. Notably, with respect to Phillips 66, Elliott was a three-time agitator: in 2023, the parties reached an informal arrangement contemplating the appointment of two directors and, in 2025, the fund ran its first-ever US proxy contest, resulting in the election of two of its nominees.
Starboard Value arrived at informal settlements with CarMax and Dynatrace. At CarMax, Starboard drove the addition of two new board members. CarMax’s press release announcing the new directors also disclosed that Starboard had withdrawn its director nominations in connection with the activist’s threatened proxy contest at the upcoming annual meeting. At Dynatrace, the settlement yielded two new directors, an investor day and the company reinforcing its commitment to return capital to its shareholders.
D. E. Shaw struck an arrangement with Sysco in August that blended two of this year’s core themes: informal settlements and AI. Sysco issued a press release containing a supportive quote from D. E. Shaw, describing the issuer’s collaborative relationship with the activist and announcing a series of business and governance initiatives, including the appointments of two new directors, “designed to accelerate its enterprise-wide [AI] transformation, enhance operational performance, and drive long-term shareholder value.” Sysco, in the release, highlighted a $100 million cost-savings program “enabled by AI-driven process improvements, automation initiatives, and operating efficiencies” that the issuer “expected to continue enhancing customer service, improving productivity across the organization, and expanding operating margins.” One of the new directors joined the company’s revamped Artificial Intelligence Transformation & Technology Committee, which Sysco noted began meeting monthly with management to accelerate AI adoption and ensure execution of the company’s “enterprise AI transformation agenda.”
Looking ahead to 2027, we expect informal settlements to proliferate, with less-established activists increasingly attempting to move away from traditional cooperation agreements that contractually impose “peace” through standstill obligations, voting commitments and nondisparagement covenants. For companies and boards, the optionality afforded to activists through informal settlements presents built-in risks that should be carefully considered before entering into such an arrangement.
Perspectives on activism in 2027
The caution that permeated this year’s activism environment drove a material pullback in expensive proxy fights and a related waning in the number of board seats assumed by activist designees. For activists, director refreshment and board representation are integral to driving change, and we anticipate that in 2027, investors will have a focused return to reshaping boardrooms, particularly at companies that have underperformed and missed M&A opportunities in recent years. How that reshaping is implemented remains to be seen, as boards and activists continue to refine their perspectives on proxy contests, settlements and the value of private engagement. We also expect activist pressure on underperformers to transcend the boardroom and reach the C-suite, with increasing claims of mismanagement and calls for leadership turnover.
Where activists and companies cannot find alignment, we expect M&A theses to be both prevalent and a key point of divergence between investors and issuers. While ever an important play on the activist call sheet, the M&A push stands to be escalated at smaller companies that have watched their larger competitors continue to grow and have suffered from a selective private equity industry that spent 2026 writing larger tickets on a more targeted transaction profile. In addition, if sponsors continue to sit on dry powder, more activists might explore putting their capital to work in the private equity mold, including with the hope of drawing private equity firms off the sidelines.
Finally, as activists attempt to get their portfolio companies to embrace the benefits of AI, they are simultaneously seeking to realize them at their own funds. With the help of AI, activists are becoming more efficient, including in sorting potential target companies, capturing and sifting through an issuer’s unstructured data, developing theses and crafting public-facing materials to amplify those theses. With these emerging efficiencies increasingly within reach for investors, we anticipate that activism will be a growing strategy for shareholders throughout the investment community and that, as a result, the field of activists and target companies will expand.
