It had to happen, with all the assets pouring into activist funds, and all the new activist PMs swinging into action. An increasing number of portfolio companies now attract attention from more than one activist investor.

This happens more than you might expect:

1. •Just last week, Pershing Square (Bill Ackman) revealed a huge stake in Mondelez, where Trian (Nelson Peltz) already has a BoD seat.
   

2. •Earlier, Carl Icahn finished the job at Manitowoc, which Relational Investors had started.
   

3. •Last year, Barington got the ball rolling at Darden, then Starboard Value carried it over the goal line.
   

A quick search of the FactSet SharkRepellent database reveals at least ten other companies in which two different investors began activist projects in the past year or so.

Overall, we like this. Another activist investor means that your assessment of a company makes at least a little sense. It can lead to problems, though, both for the activist investors involved, and the other shareholders whose support they will need.

If you’re the activist investor, what to do if another shareholder decides to pursue an activist project at your portfolio company? We’d say embrace it. Having another like-minded investor involved, who understand the nuances of corp gov, exec comp, proxy solicitation, and the like, can only help push forward your plan.

Figure out a way to work together. Form a group and share expenses.

The problem arises when the other investor has other plans for the company. What if you want a share buyback, and he wants a dividend? You want a spinoff, and she wants to sell everything? You want to settle, and he wants to prosecute a full proxy contest? The entire project can fall apart. You not only have to fight the company, you begin to fight each other. The company prefers this, of course.

Different activist investors frequently do agree on the analysis and plan, in our experience. We then arrive at the interesting (not the good kind of interesting) situation in which you each compete for influence at the company, say over BoD seats. Both investors have LPs that need impressing. Most activist PMs, with robust and healthy egos, resent another party horning in.

As much as shareholders say they like competitive elections, it stretches that preference almost too far when two different activist shareholders compete with each other and incumbent directors for a finite number of BoD seats. Someone needs to yield. Perhaps it becomes the shareholder with the smaller stake. Fortunately, this unhealthy competition rarely occurs. With the increasing number of activist investors around, it would not shock us if it did soon.

If you’re a shareholder, what to do if two different activist investors want your support at a portfolio company? We rather hope that they read the preceding few paragraphs, and mostly agree.

If not, then you need to sort out competing theses, and compare them to the company’s plan. Support the investor whose plan makes more sense, and is most consistent with your goals for the company. Perhaps support the more experienced activist investor. Whichever one has the better plan, it’s only as good as his or her ability to implement it.

This returns us to the central problem of competing activist investors. They vie not only for management’s attention. Even worse, they compete for support from other shareholders. This can only sow confusion and fear. This in turn makes company leadership, however inept, lazy, or dishonest, look that much better.

If you’re a big enough shareholder, and the company is in bad enough shape, it’s worth trying to bring the parties together. Maybe even include company management, and settle the whole matter all at once.

Something like 6,000 listed companies trade in the US, with dozens of new IPOs each year. We should have plenty of activist situations to go around. When we do collide, we can think of a few ways to work it out.