Who is Jessie Cohn, the “talking shareholder” Elliott “assault captain” who is pressing for reform by acquiring a large amount of the stocks of Salesforce in a predicament?

Cohn, now 42, told Insider in the past that he was addicted to the popular drama “The Great King of Media”, which depicts the succession battle of a media mogul (purportedly modeled after Rupert Murdoch). rice field.

However, during his 18 years at Paul Singer’s Elliott Management, some of the proxy battles and board debates that Cohn has fought as a central figure in the activism department have gone beyond the production-filled drama to become one of the most dramatic in history. You could say it was an ugly fight.

His strategy of forcing companies to undergo internal reforms through large stock holdings has plagued many managers.

Prominent Detroit businessman and co-founder of software company Compuware, Peter Karmanos, is forced to sell himself after being at the mercy of a sudden hostile takeover bid (TOB).

Carmanos, who had already decided to retire and was looking forward to a happy old age, never thought the day would come when he would publicly curse hedge funds in the final stages of his entrepreneurial career. (more on that later).

Jonathan Bush, cousin of former President George W. Bush and founder of healthcare software company Athenahealth, was kicked out of a company that took him a decade to go public.

The New Yorker reported that Cohn provided AthenaHealth’s board with an investigation documenting Bush’s inadequacy as chief executive. She showed the company’s performance trend and Bush’s Instagram post side by side, and exposed facts that a third party could not know, such as swearing when drinking at an in-house event.

Bush was forced to spend days of suspicion that Cohn was following and stealing him (also described later).

Knowing or not knowing about such a past, in September 2019, AT&T, a major telecommunications company, asked Elliott to increase corporate value through management reforms at the same time as Elliot’s large-scale acquisition of shares, and the proposal was made in just over a month. decided to accept.

As a result, AT&T’s stock price immediately rose to its 52-week high (at the time).

Trajectory of growth of “prodigies”

Cohn, who jumped into the financial industry in his early twenties when he had no idea what he wanted to do, and has served as the head of several important projects at Elliott Management, led by Paul Singer, is now an American leader. He is widely known as an activist investor who has the ability to force good companies to carry out reforms.

But when Insider spoke to more than 20 of Cohn’s colleagues, competitors, adversaries and friends in 2019 when he was campaigning against AT&T, he’s evolved over the years. I found out.

As the size of the target companies for the campaign grows, major US financial institutions such as BlackRock, State Street, and Vanguard hold shares for the purpose of long-term investment and determine the success or failure of the proposal, even if they are forced to improve their management. As it became necessary to convince him, Cohn began to use diplomacy.

Let’s take a look back at Korn’s half-life. He may have missed Elliott by a thin margin.

After two years on Morgan Stanley’s mergers and acquisitions (M&A) team, Cohn began looking for a job at a hedge fund, where he was in distress. I received an offer (provisional offer) from Elliott Management when I was an investment specialist.

Cohn also had offers from other, more “established” hedge funds, according to Ray Maguire, his former Morgan boss and future vice chairman of Citigroup.

Either way, it’s no surprise that Cohn had that option.

Born in Long Island, New York, he was a so-called “child prodigy” as a child. He attended summer programming camps for middle and high school students, and before he could drive a car (around age 15, depending on the state in the US), he received a coding certification from the software development company Novell. Obtained.

In later years, Cohn forced Novell to sell itself to a competing company, Attachmate, and became a director himself to reform management.

Returning to his childhood, Cohn went on to study at the Wharton School of the University of Pennsylvania, a prestigious business school. During her school years she was a member of the Literary Institute (!) and in 2002 she graduated with summa cum laude.

After graduating, he got a job at Morgan Stanley, and his direct supervisors were Maguire and Paul Taubman, a master deal maker in the M&A industry who later served as co-head of Morgan’s corporate and institutional securities division. It was two people.

According to multiple people who spoke to Inside, the network of connections in software and, by extension, tech, that he built during his time at Morgan laid the groundwork for his lion’s share of success at Elliott.

According to Maguire’s testimony, Cohn and fellow fellow analyst Alta Tavae (now managing director of Clearlake Capital Group) were often within Maguire’s sight at the time, coming up with new ideas. He said he would often knock on his office when he had an epiphany.

Maguire said Cohn was seen as “intrepid” and “one of the smartest minds.”

And so, the day came when I told the company about Elliot’s transfer. Despite speaking with his immediate superior, Maguire, Cohn decided to trust his own intuition.

“For Jesse, I think that was a defining moment that changed his life for the rest of his life. He made the decision to take responsibility for his life.”

Cohn then started the activism department at Elliott from scratch. His love of triathlon has the focus and energy to terrify his rivals, while earning the deep love and respect of his peers.

“I want to improve the company” started with pure enthusiasm

Korn launched its Activism division in 2005.

The first target was Enterasys Networks, a network switch manufacturer that competes with Cisco Systems. He started with a small stake and doubled his investment (to wager pressure) in the process of seeking a sale.

The investment was only $15 million, which is nothing compared to its current size, but it still seems like a big step for Korn.

Thoroughly researching the internal affairs of a company, making unannounced phone calls to its customers, employees and engineers to obtain first-hand information that gives a deeper understanding of the switch manufacturing industry is Korn’s job. was sexually compatible.

Korn concluded that Entasys already had loyal customers, but its products weren’t reaching enough potential customers.

In any event, Cohn’s career ambitions began to take shape vaguely through this first experience. In short, he likes making companies better.

Soon, a number of small tech companies jumped into Korn’s sights. Even though they all had attractive products, their stock prices continued to stagnate. He bought a lot of those shares and approached management, telling them they were doing it wrong.

However, the story was often complicated.

The 2006 case with Harry Knowles’ barcode systems manufacturer Metrologic Instruments is a classic example.

Knowles recalls that the first time he met Cohn was at the company’s dismal annual shareholder meeting that year. He approached Knowles and told him that he should resign as CEO and sell the company.

“He said, ‘Hi, can I talk to you for a minute?’ And he said, ‘You don’t have a choice.'”

Knowles, who was in his 70s at the time, had long believed that it would be difficult to continue at the top of management as his age approached.

So he agreed to Cohn’s offer and decided to sell Metrologic to Elliott and private equity firm Francisco Partners for $440 million.

However, Elliot and others immediately passed the baton from Knowles to another CEO, dismissed Knowles’ close friends, and abolished all businesses that Knowles had continued through personal connections.

Knowles recalls the events of that time as “just painful.”

“Kutabari Yagare”

The Metrologic deal is certainly not the last time Cohn put pressure on a target company that resulted in a run-in with management.

After researching through 2012, Cohn set his sights on the Detroit software company mentioned above, Compuware. At that time, the founder Karmanos had already entrusted the position of CEO to a successor, and it was just about time to begin his leisurely retirement.

After Elliott acquired a stake in the company and pressed for layoffs and cost cuts, rifts began to form between Carmanos and his chosen successor, Bob Paul.

As Elliot buys more shares, the two begin to swear at each other over the pros and cons of cost-cutting measures.

Among the cost-cutting measures was Carmanos’ retirement party, which was planned to be held at a private Detroit airport with a budget of $1.5 million, according to court documents Carmanos filed against members of the board of directors. seems to have been included.

Karmanos’ anger peaked at the end of 2012. Cohn, who had been buying up Compuware stock, finally embarked on a hostile takeover bid (TOB). That was it.

In the end, Compuware rejected Elliott’s $2.3 billion tender offer and sold it to private equity firm Thoma Bravo for $2.4 billion. Elliott, who remained the largest shareholder, of course approves of the decision (because of the large profit on sale).

According to local media, the Detroit Free Press (July 25, 2015), Karmanos said at an event attended by hundreds of people.

“If I was still a top executive, I would have said to that hedge fund, ‘Go f— themselves.'”

In the aforementioned court documents, several Compuware board members testified in detail about Cohn’s heavy-handed methods.

According to it, Cohn collected private information such as the work of each director’s spouse and the school their children attended in a number of thick files. It seems that they were placed side by side in a row.

Carmanos later said that the shock at that time was one of the factors that the board ultimately decided to sell (to Thomas Bravo).

Suspected of tailing and voyeurism…

It was his campaign against Athena Health, founded by former President Bush’s cousin, that inevitably boosted Cohn’s fame as Elliott’s raider leader.

According to the New Yorker report introduced at the beginning, regarding the Instagram images that appear in the investigation materials that Cohn submitted to the board of directors of AthenaHealth, Bush secretly filmed an anonymous user with him and his girlfriend. , claiming to have even sent the image to his wife, and developed a theory that Elliott was behind the sequence of events.

This allegation, and other allegations that Elliot was behind reports of past domestic violence and other incidents that directly led to Bush’s eventual departure from AthenaHealth (Bloomberg, June 4, 2018) Elliott has repeatedly denied any involvement, including

Either way, Cohn’s reputation won’t be tarnished by the spread of these episodes. Rather, it’s a plus for Elliott.

There aren’t many boards or corporate lawyers who want to duel with highly regarded activist investors like Elliott does, and the companies Elliott has targeted in management reform campaigns and publicly announced large stake acquisitions are often seen as stocks that have gone up in value. All the more so because it will rise sharply.

Elliott founder Paul Singer also appreciates Cohn’s ability to create change within the organization.

It should be noted that the most recent large-scale example ahead of Salesforce is Twitter.

In March 2020, Elliott acquired a large amount of the company’s shares in order to oust co-founder and CEO (at that time) Jack Dorsey. He won a board post and consistently demanded growth, innovation and the achievement of sales targets. He also succeeded in removing Dorsey from the top management.

However, it seems that Elon Musk, who leads the US electric car giant Tesla, did not expect to embark on the acquisition of Twitter, and during the second quarter of 2022 immediately after the acquisition plan came to light, It has sold all its shares (Reuters, August 16, 2022).