Shareholder activists will likely step up their efforts against non-financial services companies in North America this year, according to a new report from Moody’s Investors Service Inc.

The credit-rating agency is expecting a resurgence in shareholder activism, after a decline last year. Says Chris Plath, vice president and senior credit officer at Moody’s, in a statement: “Rising M&A activity, as well as companies’ growing cash piles and abundance of investment capital, will likely produce more activist campaigns in the year ahead.”

Activists will likely target primarily mid-sized and smaller companies, with only occasional runs at large firms, the report suggests: “The bulk of activism will focus on smaller firms because it’s easier to gain a foothold and exert leverage over their boards and management. Smaller companies also have fewer resources to mount defenses against activist campaigns, in addition to being more plentiful relative to mid- and large-sized entities.”

On a sectoral basis, technology companies will remain favourite targets for activists, the Moody’s report says, “due to their large cash balances, low debt levels, steady cash flows and relatively small dividend payments.”

However, activists may be challenged to find attractive targets in the year ahead, Plath suggests: “Headwinds from stretched equity market valuations, rising interest rates and few clear opportunities in large-caps will translate into only a modest uptick from 2016 levels.”