Many businesses can self-sustain yet many others cannot operate without a good initial investment to boost them. Not all businesses though love investors, no matter what the size of the business is, because investors give the money in exchange for not only returns but also power and control. Recently, the iconic Michael Dell had a notorious dispute with Carl Icahn one of biggest and most influential investors it has been a long time.
Dell thinks his company is undervalued, dispute
In the process of going public again, Dell gave its investors the choice to own the new market-valued stocks as opposed to cash offer. Icahn thought the old private stock he used to own is worth more than both the offer and the public fair-value stock, which was the case as the time has shown it.
Be careful what you wish for, they say. Michael Dell as chairman and majority shareholder of the then-private company Dell thought the company is undervalued and that he would benefit from taking the company once more to the public traders to define its fair value.
Today’s stock value is below expectations
The DELL stock kicked off at $42.17 and is trading at around $43 as this article is being written. What this says is, despite the very normal nature of the conflict between Michael and Carl, it has show us, more than anything, the power that investors have over the companies they invest in, even smaller net-worth minority holders like Carl whose net-worth is around half that of Michael.
The untold power of investors is mightier than you think!
This brings us to the discussion around the untold power of the investors and how this should be used for the greater good of the economy and the society. A TED Talk by Vinay Shandal about how Investors can turn on the heat on companies to do good is of critical importance in today’s world. Before businesses manage their investor relations nowadays, companies should strategically be aware of their ever-changing investor expectations. The expectations have always been revolving around financial KPIs, image metrics and public news. Today’s world suggests that those change into:
It is no longer a question of corporate social responsibility or citizenship. It is a survival call; businesses that are built on unsustainable pillars should slowly switch into more sustainable ones, not only for the sake of the environment, which is an ethical driver, but also for the sake of business because according to recent studies, environment-aware businesses are more profitable.
Citizenship & Responsible Behavior
Recently, many business figures have lost their jobs, money and reputation because of bad personal behavior. It cannot get any more critical for business people to focus on their personalities in business today. Steve Jobs’ behavior as portrayed in his biography and a couple of movies recently released cannot be tolerated in today’s world.
And of course, Profitability.
No need to mention investors are there for the money, just like all employees, freelancers and executives are. But just like everybody, money without cause, fulfillment and achievement means less to investors than we think. This explaines why investors put their money where their passion & knowledge are. We all strive for something better, dream of a better future and work towards one. For that, we need the money.
What active investors do today is just… okay.
Some active and responsible investors elect to divest, or sell their shares, from businesses and organizations that do not align with their principles, says Shandal. But this only means they will sell them at a very high price to maximize their returns and eventually benefit that organization with a higher market value while they still do not align on their principles, which defies the purpose of divesting in the first place. In that case, those active and responsible investors are rather harmful to the very cause they are defending.
Instead, Shandal suggests that investors would take a more proactive stand and push hard on businesses, in all possible means. Chances are, investors would also make good returns in the process. It doesn’t matter how big or small the investment, the return or the stake is, the investor’s influence over the business is invaluable and can alter the very existence of the entire business.
Imagine all that power going out after the right cause!
Carl Icahn made a lot of money in the Dell-going-public-again deal by just threatening of a war and he barely lost the battle (Dell investors voted positive for the public) but certainly won the war. Imagine that power and what it would achieve but instead of pursing financial return, it would leverage a better future.