Between Proxy Seasons: Four Trends to Watch

By Francisco Morales Barrón, Jon Solorzano, and Robert Ritchie

After every proxy season, public companies engage in numerous important activities: reviewing voting results, updating regulatory disclosures, improving internal processes, and dissecting shareholder feedback, just to name a few.

No less important, but sometimes overlooked, is for companies to understand what shaped the season broadly — to take stock of the macrotrends and determine how best to navigate them. When we advise companies and their boards, we often explain these trends and their effects, helping clients determine how best to incorporate them into their strategies for the year ahead.

Reflecting on the 2025 proxy season and looking ahead to 2026, we see four trends standing out among the most important.

The M&A Rebound Has Room to Run

When 2025 began, many analysts projected the year would bring a boom in M&A activity, built largely on the idea that pro-business policy priorities under the incoming administration, including a more favorable antitrust environment for corporate tie-ups, would create a robust dealmaking environment.

Despite numerous headwinds, especially around tariff uncertainty and higher-for-longer interest rates, the first half of the year partially delivered on that optimism, with global deal value up 15 percent but global deal volume down 9 percent over the same period in 2024.

Yet with much of the rise in value driven by megadeals in a few sectors, there remains room for the rebound to expand, especially with the Federal Reserve recently initiating an interest-rate cut and signaling that more will follow through the rest of the year and into 2026.

As deal volume rebounds, underperforming companies can expect to see more activist campaigns with an M&A thesis. While campaigns centered on operations, strategy, and governance will continue, look for activists to press harder for strategic reviews, spinoffs, and divestitures. The “unlocking value” drumbeat isn’t fading away.

Private Activism Should Continue to Accelerate

Historically, activists have often liked to make a splash, applying intense public pressure to their targets through open letters, securities filings, and media campaigns. But in today’s era of greater issuer-investor engagement, fewer activists are looking to brawl in public, and more are taking their case for change behind the scenes.

In our experience, this approach has proved appealing to smaller funds, including those that have spun off from brand-name activists and don’t yet have the resources that the big players do. Tactics include submitting private nominations of directors and pushing for strategic reviews or selective outreach to potential buyers.

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These situations can be tricky for both companies and investors to navigate. Our view is that both companies and investors benefit from an initial private conversation, rather than an immediate public dispute. The new shape of activist may not necessarily be seeking the limelight, and may be more focused on operational and managerial suggestions that could potentially be of benefit.

Peacetime Preparation Is Vital

Public companies today face myriad near-term pressures — regulatory, economic, geopolitical, technological, and more. So, it can be easy to put investor engagement to the side, especially outside of the conventional proxy season.

But being able to engage with, and if necessary defend against, an activist begins well before an activist comes knocking. As some companies have learned the hard way, trying to build relationships with investors during the heat of a proxy battle is a recipe for losing it. As the saying goes, it’s never wise to try to make a friend when you need one.

A more sustainable approach is for boards, in coordination with their corporate secretary and investor relations teams, to spend peacetime developing these relationships with as many shareholders as possible — from the largest institutional investors to the smallest hedge funds.

This means pursuing candid conversations, building rapport, and expressing genuine openness to shareholder views. It means helping investors understand the company’s priorities and how this particular board operates and why it is fit for purpose.

Peacetime preparation gives companies and their boards a deep understanding of their shareholder base. It can help reach a potential collaborative approach that both company and shareholder view as a win-win solution, build defensive allies in the event that investors seek to wage a proxy battle, and position the company to secure a favorable outcome in any proxy battle it does encounter.

Disclosure Guidance Signals a New Normal for Investor Engagement

In February, the SEC staff issued new guidance on the eligibility of shareholders to file Schedule 13G — the short-form disclosure for investors who acquire beneficial ownership of more than 5 percent of a company’s shares, but who do not aim to influence or control the company. Investors who reach that 5-percent threshold and do aim to influence or control the company must file the longer, more burdensome and time-sensitive Schedule 13D.

The new guidance narrowed the activities that investors can engage in while still remaining eligible to file Schedule 13G. It also removed the safe harbor for common engagement topics, including those often falling under the ESG umbrella. This change might seem mostly about paperwork. But in practice, it has quickly reverberated in boardrooms across the country.

Now that investors, especially the largest institutions, are more concerned about triggering a 13D filing obligation, they have become far more cautious in how they communicate with companies, and far more reticent to explain their views and expectations. This new normal wasn’t fully borne out in the 2025 proxy season. But when it is fully borne out in the years ahead, the reasons behind some vote outcomes will likely become more difficult to discern.

Recent data show that investors are holding fewer engagement meetings in light of this new guidance, so how should companies navigate this new normal? As we see it, companies should remain proactive in seeking out engagements, taking meetings with investors whenever they can.

But with investors now more in listen mode, it’s all the more important for companies to spend the time to understand investors’ publicly available voting guidelines. Indeed, while engagement conversations remain critical for building relationships, they may be less likely to yield detailed information, so companies will have to do more work to read the room.

Francisco Morales Barrón, Jon Solorzano, and Robert Ritchie are partners at Vinson & Elkins LLP.

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