Market declines or commodity downturns are something that those who take an interest in financial markets are more than familiar with.
Whether in the small, mid or larger cap spaces, market or commodity weakness has the potential to create opportunities for corporate shakeups, be it at the board, management or company levels.
From a corporate M&A perspective in resources, a depressed commodity price (and hence share price) coupled with a low Australian dollar, has the potential to make ASX listed companies or Australian-based assets, attractive to companies looking opportunistically to add value and/or synergies to their portfolio, ahead of an inevitable future turnaround.
Likewise, disgruntled shareholders, looking for somewhere to lay blame may well look to agitate for changes at the top, including the serving of notices under Section 249D of the Corporations Act.
In the face of either scenario, the primary duty of the boards and management of ASX listed companies is to act in the best interests of all shareholders. Should shareholder or corporate action occur, decisions made in relation to these matters should always be viewed through that lens, leaving ego and/or personal impact to the side.
Acting on that duty then, it pays for companies to be vigilant and ‘at the ready’ for action from disgruntled shareholders or opportunistic corporates, especially during periods of uncertainty. This includes having access to skillsets and advice that can help guide companies through the turbulence of corporate or shareholder action and arrive at an outcome that is in the best interests of the company’s shareholders, without fear or favour.
These outcomes can include a wholesale defence of the matter, a negotiated middle ground, agreeing to the proposed action or sourcing a preferred alternative (ideally having extracted as much value for shareholders as possible in the process).
To obtain the best-case in these potential outcomes, obtaining clear, unbiased strategic advice relevant to the matter is of upmost importance. This advice can come from various sources and companies should look to assemble a well-rounded team of advisors that is suited to the deal with the matter at hand. Such a team would, in many cases, comprise of legal, corporate/financial, investor relations and communication and, where needed, proxy solicitation, advisors.
At a personal level, I have had around 20 years’ experience working within ASX listed companies in various legal, commercial, governance and director roles. This experience has included asset acquisitions and sales, Government negotiations and interactions, IPOs, and M&A across the globe, as well as dealing with board agitation from shareholder groups. As a result, I have seen first-hand, the positive effect a company working with a well organised team of advisors can have on outcomes when situations arise.
Through this experience it has also become clear that where companies are in downturn situations, putting some pre-emptive thought into corporate defence or board composition matters also reaps benefits. It is always better for a company to position itself to be proactive rather than reactive.
Whilst never having been a Scout myself, the group’s well-known motto ‘be prepared’ consistently comes to mind, and is never more applicable than now.
Matt Worner – Partner
Matt is a former corporate lawyer with more than 20 years’ experience working for and with listed companies in various positions including legal counsel, company secretary, corporate adviser, CEO and Director, mostly across the resources sector. His career has included working at a senior level on projects across the globe, including Southeast Asia, Africa, the United States, Europe and Australia. Additionally, Matt has considerable experience in managing IPO’s, corporate transactions and capital raisings, and maintains an international network of investors, advisors, brokers and company executives.
Matt’s client advisory experience includes Patriot Lithium, Canyon Resources, Cannon Resources, Greenstone Resources, Global Lithium Resources and Gold Fields. He was recently a director of Talon Energy (which Strike Energy acquired in 2023) and is now a director of D3 Energy.