FRIDAY 23 JAN 2015 11:01 AM

COMMUNICATIONS CRUCIAL DURING MERGERS AND ACQUISITIONS

A strong public relations strategy can have a direct influence on the success rate of merger and acquisition deals according to a recent study by Cass Business School. The research examined communications activity around 198 UK M&A deals worth at least $100m between 1997 and 2010.

The research found that deals that incorporated PR strategy had a higher chance of completion. Professor Scott Moeller, director of Cass’s M&A Research Centre, says, “The research clearly shows the importance of properly resourcing deal teams’ communication efforts. This is especially the case given the proliferation of social media, and the need to be responsive to a much wider range of stakeholders.”

The study found that deals where both companies were represented by an agency had the highest completion rate, followed by deals that used one agency. Deals where neither companies where represented by a PR firm had the lowest completion rate overall. An investment in good quality PR early on in the M&A process can greatly improve a company’s chances of closing on a deal.

Chris Salt, a partner at Headland, a London-based financial and corporate communications consultancy, adds, “Whether it’s from a PR agency, a strong in-house communications team, one of the bankers or the CEO, what’s important is someone who believes in the usefulness and power of good communications. If you start to think about communications when you’re crafting a press release or a regulatory news statement, you’re in trouble.”

The study, ‘Telling the story’, also found that companies can improve their chances of closing on a deal if the offer is announced rather than leaked, With half of deals involving reactive announcements failing to close, leaks remain a serious threat to M&A deals. Statements from company chairs and CEOs can also be advantageous. Deal announcements containing quotes from CEOs of both the target and the acquirer companies had the highest rate of closure at 91%. Those with no leadership statements completed 67% of the time.

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