Arguably, the single best way to ruin a CEO’s day is to report that an activist is on the phone and has just taken a position in the CEO’s company. More and more CEOs are getting this call, as activist investing has exploded in recent years. We examined more than 400 activist engagements and found that the targets are getting larger and the industries more diverse. We also found that the activists’ attention is not limited to so-called laggards; it includes a number of high-performing companies as well. In short, few, if any, management teams are immune to an activist challenge.

Bain’s analysis highlights the tough dilemma management teams face when they confront an activist. What the activist says is often right, and activists’ overall track record indicates that they do, on average, create shareholder value. But such a result can come at a high cost for the organization. Moreover, many of the rewards are front-loaded, leaving others to cope with the aftermath. Hence the dilemma: A company cannot and should not ignore activists, but it also should not immediately accept or reject their ideas. It must be ready to evaluate the activist’s investment thesis quickly—and then decide where to cooperate, fight or negotiate.

How to get ready for the call? The first key step is to understand the common patterns and investment theses of activists in general, and of those in your sector in particular. That will help you pressure-test your strategy and your relationships with your investors. The other key step is to create a comprehensive “break the glass in case of emergency” plan. With a plan in place, you will not be caught by surprise—and when an activist engages, you and your team will know exactly what to do and who will do it.