Steel Partners, a US investment firm, has raised its cash offer for medical aesthetics company InMode to $16.75 per share, while simultaneously calling for the removal of CEO Moshe Mizrahy. The move escalates what was already a contested takeover situation into a full-blown governance dispute.
In a letter to InMode's board, Steel Partners said its new proposal is superior to a $16.20 per share bid from MN Business Strategy, which Steel Partners alleges is connected to Mizrahy. The investment firm argues that the CEO has improperly influenced how investors perceive the company's prospects and value, effectively tainting any deal process that involves him.
Why This Matters for InMode Shareholders
Takeover bids often revolve around price, but this situation has added a layer of corporate governance. Steel Partners is not just offering more money—it is questioning the integrity of the decision-making process at the top of the company. By urging the board to replace Mizrahy and appoint an independent committee to review the bid, Steel Partners is trying to ensure that any decision about the company's future is made without what it sees as a conflict of interest.
For everyday investors, this matters because when management is perceived as conflicted, boards typically respond by forming a “special committee” of independent directors. This committee is tasked with running the review at arm's length, reducing the risk of shareholder lawsuits later. The near-term question for InMode's board is less about comparing two prices and more about proving the process is clean enough that any outcome—a sale, a different deal, or no deal—will be defensible.
This kind of governance battle is not unique. Similar dynamics have played out in other contested takeovers, such as when Prologis pressured SEGRO to let shareholders vote on its bid, or when Workspace Group urged shareholders to reject a fast-sale plan. In each case, the credibility of the process became a central issue.
What It Means for Investors
In takeover situations, a stock often trades below the offered price because investors assign a probability that the deal won't close. This is known as the “deal spread.” Here, InMode's stock is likely to trade at a discount to Steel Partners' $16.75 headline price, reflecting uncertainty about whether the deal will actually happen.
But the conflict allegations add a second layer of uncertainty. Even if the cash number is clear, the path to a signed agreement depends on whether InMode sets up a genuinely independent committee and how forcefully the board pushes back. That can keep the spread volatile, as merger-arbitrage traders and other event-driven investors continuously update their “deal certainty” math based on process signals, timelines, and the risk of litigation or delays.
For ordinary investors, the key takeaway is that the headline offer price is not the same as the value they would receive. The governance dispute means there is a real chance the deal could be delayed, modified, or even fall apart entirely. Investors should watch for signals from the board—such as whether it forms an independent committee or publicly responds to Steel Partners' allegations—as these will be the clearest indicators of how the situation is likely to unfold.
Background on InMode and Steel Partners
InMode is a medical technology company that develops minimally invasive aesthetic treatments, such as body contouring and facial rejuvenation. Steel Partners is a diversified holding company with investments across manufacturing, energy, and financial services. Its bid for InMode reflects a broader trend of activist investors and private equity firms targeting smaller healthcare companies with strong cash flows but perceived undervaluation.
The company's stock has been under pressure in recent years, and the competing bids suggest that multiple parties see value in InMode's technology and market position. However, the governance dispute adds a layer of complexity that could deter other potential bidders or complicate the timeline for a deal.
Investors should also be aware that such disputes can lead to legal challenges. If the board does not act in what shareholders perceive as their best interest, lawsuits could follow, further delaying any transaction. This is why the formation of an independent committee is so critical—it provides a buffer against such claims and helps ensure that the process is seen as fair.
Looking Ahead
The next few weeks will be crucial. InMode's board must decide how to respond to Steel Partners' letter. If it agrees to form an independent committee, the process could move forward more smoothly. If it resists, the battle could become more public and more contentious.
For markets, the situation is a reminder that in contested takeovers, price is only part of the story. Governance, process, and the perceived independence of decision-makers all play a role in determining whether a deal actually gets done—and at what price. As always, investors should focus on the process signals rather than just the headline numbers.
