Unlocking Shareholder Value in Europe

While European equity markets outpaced much of the developed market competition in 2017, a bout of global volatility in the first half of 2018 dampened their momentum.

We see signs that European corporate management teams are beginning to embrace the shareholder-friendly behaviors that have long been commonplace in the U.S., potentially unleashing even greater economic and corporate growth on the Continent and ushering in an extended period of equity market outperformance relative to the U.S.

We believe we are in the early stages of a trend in which European corporate management teams increasingly take actions designed to unlock value on behalf of their investors, having seen evidence most notably in the following areas:

  • Shareholder Activism. Local and international institutional investors are seeking opportunities to engage constructively with corporate management teams to improve governance and to build long-term shareholder value, a trend supported by encouraging shifts in regulatory policy.
  • Specialization. A sharper focus on core operations has larger companies shedding ancillary businesses, often to the benefit of both the parent company and the newly independent spinoff, and unwinding cross-shareholdings.
  • Mergers and Acquisitions. Strategic acquisitions—targeted purchases that complement or enhance existing lines of business—have become a priority, as companies seek to increase value rather than amass assets.

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