Activist investing continues to be top of mind in corporate America, with high-profile engagements at Starbucks and Disney earlier this year, and campaigns against Johnson Controls, Texas Instruments, Southwest Airlines and Softbank in the news more recently.  When sophisticated, experienced and well-advised activists come calling, there’s often a familiar playbook and cadence.

But what about the wild cards?  The activists who are newer to the landscape, lack the large-scale funding of the big boys, or don’t follow the established rules of engagement (or even the regulatory and legal requirements)?

Inexperienced or unsophisticated activists generally have the same goal as larger, more experienced players:  They seek to increase the value of their investment, and the shares of other stockholders, by encouraging the target to take some action that would improve their business.

But unsophisticated activists often come to their activism through different paths than their larger counterparts:

• A first-time activist may be an experienced long-term investor in stocks, but an investment may have deteriorated in value, leading the investor to turn to activism as an attempt to recover those paper losses.

• An investor – perhaps a board member or executive – may become disgruntled with the company, leading them to launch a campaign.  This can lead to negatively charged relationships, interactions, and public communications, including accusations of malfeasance or incompetence, potentially from both sides.

• An executive, market participant, or investor could have observed the outsized returns of other activists, and think to themselves, “I can do that too…”  These activists often lack the strategic and tactical wherewithal to effectively execute a campaign, leaving them vulnerable to legal, communications and strategic maneuvers from the target company.

We’ve advised several clients on how to manage these kinds of activists – including one this spring – and have a few thoughts:

• Take the fight to them, at the right time: When an unsophisticated activist engages, there’s a tendency to want to ignore them – to not give them attention and credence.  That’s understandable, and may be the right approach for a time.  But at some point, the pressure must be put back on the activist.  These activists often lack coherent, thoughtful ideas for the company, and ultimately need to be put in the “unserious” box.  Other shareholders may need to know that the proposals the activist is making should be discarded, and, in some instances, they need to know it quickly.  In one situation we were involved in, the activist folded after the company publicly announced it would not support the activist’s board nominees.  It became clear that the activist did not actually want to expend the resources on a prolonged proxy fight and naively thought they could score an easy win with some public pressure.  We’ve also seen instances where the legal and regulatory errors of an activist make them vulnerable to a well-timed counsel-to-counsel conversation about how regulators might view those foot faults.

• Be well advised:  Often, an inexperienced, underfunded, or quixotic activist lacks the resources to bring on competent advisors.  They may go cheap on lawyers, financial advisors, communications support, and proxy solicitors – or not hire them at all.  That doesn’t mean the company under attack should cut corners.  Often, the unsophisticated activist will make errors in their legal filings, shareholder solicitation efforts or communications strategy.  Companies should bring on advisors that have been through fights before, so that they are sure to avoid making errors themselves and can exploit the other side’s mistakes.  An unsophisticated activist’s unpredictability means Boards and management teams need tested, nimble advice.

• Stay ready for everything: Inexperienced and unsophisticated activists are unpredictable.  They may miss deadlines, but still try to nominate director candidates.  In one instance we saw, the activist didn’t follow the company’s process to nominate board candidates but put out a press release claiming to have made the nominations (and then tried to get the company to accept those “nominees” as legitimate ones).  Unsophisticated activists may react emotionally or angrily if the company rejects proposals or candidates.  They may make demands of the company that are wildly impractical or unwise.  Boards and management teams need to be ready for everything, and must strategize quickly when surprises inevitably happen.

No activist investor situation is easy.  But in some ways, the smaller, unsophisticated, unpredictable activist is even more challenging to deal with than a large, well-known, and, perhaps, predictable player.

The key is to take the activist seriously, no matter how small or gadfly-like, get good advice, and take the fight to the other side in a strategic fashion.