Select Page

This article, written by Henri Steenkamp, was originally published on


The rise of investor activism is certainly a controversial topic within many circles and industries. It’s even caused some companies to reshape their CFO searches. The business-development company sector is seeing a rise in activism as stocks fall across many institutions in the market. While boards will almost always agree that they are capable of guiding the company to success, some relationships between shareholders and the company indicate a disconnect between the two.

Shareholder activism tends to reveal this underlying miscommunication between a company and its shareholders. Many of these scenarios can be avoided with a proactive mindset and approach. At my business-development company, Saratoga Investment, we haven’t encountered any issues with shareholder activism to date.

We credit this to maintaining a healthy relationship with our investors that centers on proactive communication and mutual respect — ideally negating the need for escalation on the shareholders’ part, which can often feel hostile to a board and its management. When partnering in this type of communication with positive results and actions supporting various parties different interests, all parties can likely avoid escalating issues to a point of contentiousness. Instead, we can come together and discuss the best course possible for everyone.

A continued dialogue is essential to the success of a business-development company and the relationship with its investors. Our primary goals are maintaining quality through disciplined underwriting, keeping liquidity strong, and generating meaningful returns for our shareholders.

In doing so, our shareholders are more likely to see the short- and long-term benefit of investing with Saratoga and understand our direction. While short-term results have produced solid earnings, we discuss and remain focused on long-term returns. That’s why we suggest holding regular meetings to update investors of any pressing news or developments in the company and/or sector as disclosed in our public releases and earnings calls.

By laying out these goals and agendas during these releases, Saratoga maintains transparency with our investors. Having follow-up calls with us as requested allows them to voice ideas, questions, and concerns that may arise so that we may address them in a timely fashion. Certainly listening is key, but considering their insights is just as vital. You must listen and consider investor input whenever possible. These people are investing in your company. They deserve to be heard. You never know when some excellent ideas will come forth.

Even if the company opts to go in a different direction, the shareholders and the board can look back to see the healthy dialogue that led to this point. Sometimes more rounds of conversation will arise, but if the reasons and objectives are clearly laid out by the board, general understanding and respect is more likely to be reached.

We try to keep our fingers on the pulse of our environment, market, and the views of our various constituents, and take a proactive approach to communicating our successes. Thankfully, we’ve been able to avoid any significant setbacks in recent quarters, but negatives need to be communicated when they occur.

Even when negative news arises, there is an opportunity for proactive communication that leads to an expression of solutions and strategies. In some cases, this isn’t possible and the news must simply be delivered. But regardless of the scenario, healthy talks with investors are almost assuredly going to lessen tensions that could otherwise escalate and lead to hostile shareholder activism.

About the Author

Henri SteenkampHenri Steenkamp, originally from South Africa, is currently the CFO of Saratoga Investment Corp in New York City. He specializes in BDCs with fifteen years of experience accounting and financial reporting across many industries. Follow him on Twitter