Marc Andreessen Reminds Us Activist Investors Will Always Have Stuff to Do
|April 22nd, 2015||
|Contributed by: Michael R. Levin, The Activist Investor|
|We sometimes just marvel at the things that executives say when they consider activist investors. We’ve remarked before on what CEOs really think about shareholders, and their candid opinions about us.|
Recently, Silicon Valley luminary and venture capitalist Marc Andreessen broke new ground in disparaging investors. In an interview in Fortune Magazine, he discoursed on a wide range of subjects, including macroeconomic conditions, women in tech, and many others.
He covered activist investors in technology briefly and memorably. He laments,
I have been shocked in the last five years how little M&A there’s been as compared to what I think that there ... should have been... there are a lot of big companies that are on the wrong side of various kinds of technological shifts. And there are a lot of acquisitions that kind of everybody knows should happen.
Why don’t they?
...we’re in this environment of just extremely intense risk aversion on the part of public companies... public companies are being ... forced by ... activists ... to give back huge amounts of cash instead of investing it in their business.
That’s cool. Investors and executives can and should debate how and when portfolio companies should invest or disburseexcess cash, and how much. This may mean that they don’t have much cash available to spend on acquisitions. That mostly suits us investors, who have grown weary of wasteful deals that just stoke executive egos.
What’s really not cool is how Andreesen proposes to shut off that debate (emphasis ours):
There’s never been a more dangerous time to kind of be an unprotected public company. That said, Facebook [and] Google demonstrates ... there are protections you can wrap around these companies. You can do a “dual class stock.” You can do other kinds of voter control things.
“God help you”? “Unprotected”? “Chum”? “Fortress”? Really?
Let’s get this straight. Andreesen equates activist investors to short-sellers, which is just plain incorrect. And, as a response, he advocates entrenching company leaders using dual class shares and other “voter control things”.
We should appreciate how he urges companies to take seriously their public shareholders. It beggars belief that doing so requires these kind of measures.
This is embarrassing. No wonder corp gov in Silicon Valley gets low marks. It’s why Carl Icahn singled out Andreesen’s escapades at eBay, and why we suggested smart investors avoid tech IPOs like Facebook.
It does, though, give activist investors more to do. Not the kind of additional work we relish, but it’s part of the job.
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