Steel Partners comes out against `value-destructive' CEO-led buyout offer for InMode

Steel Partners, an activist investor with a significant stake in InMode, saw its $18-a-share offer for the medical aesthetics company rejected in February. It is now pushing back against a new CEO-led buyout at $16.20, calling the proposal "value-destructive" and warning of governance failures.

In a letter released this week, Steel Partners urged InMode's board to form an independent committee and hire a separate financial adviser to evaluate the proposal. The fund said the CEO's offer, at a discount to its own rejected bid, raises questions about fairness and process.

Steel Partners had previously offered to acquire InMode for $18 a share, a bid the board turned down. The new offer, led by CEO Moshe Mizrahy, comes at roughly a 10% discount to that price. Steel Partners said the lower valuation fails to reflect InMode's cash position and growth prospects.

The activist group's criticism centers on what it calls a lack of independent oversight. The board cannot negotiate against itself, the fund argued. Steel Partners wants a committee composed of directors with no ties to management to run the sale process and said it would consider topping the CEO's bid if a fair auction is held.

InMode has not yet commented publicly on Steel Partners' latest letter. The company's shares have traded below $16 in recent months, giving the CEO's offer a modest premium to the market price before the bid was announced. Still, Steel Partners argues the discount to its own offer shows the board is not maximizing value for shareholders.

The standoff is the latest example of an activist investor challenging a management-led buyout after its own bid was rejected. A credible alternative bidder can force a higher price or scuttle a deal entirely. Shareholders in InMode face the risk that the CEO's offer succeeds without a competitive process.

InMode, a maker of non-invasive aesthetic devices, has seen its market capitalization decline from pandemic-era peaks. The company held roughly $300 million in cash as of the last earnings report, according to public filings. Steel Partners argued that cash hoard makes the $16.20 offer look cheap.

The dispute highlights tensions between insider-led buyouts and independent board oversight, a theme that resonates across the small-cap medical device space. Other companies with activist shareholders may face similar scrutiny if they pursue insider deals at a discount to prior offers.

Steel Partners said it remains interested in acquiring InMode at a fair price. The fund's letter demanded a response from the board within 10 business days.