Using creativity to maximise value created in M&A
Mergers and acquisitions can transform value - for better or for worse- so you need to deploy your full strength.
Mergers and acquisitions are a crucial boardroom lever, providing new options to create value or even reinvent key aspects of the business. Yet an unfortunate number of deals destroy value for the acquirer or see the target reap the lion’s share. Businesses need to wring every last drop of value from the deal to ensure they’re on the right side of the equation. Of course, the price is critical. And just as important is making sure the integration delivers maximal synergies while minimising dis-synergies that drain value from a deal. Creative communications can be a powerful tool for making it happen.
Why business-as-usual comms don’t cut it
M&A is one of the most price-sensitive events a stock will undergo. The announcement is critical for market and stakeholder perception of the deal. But businesses aren’t able to rely on their full communications strength. The number of insiders has to be small and the complexity of most deals is not conducive to simple, clear comms. Stakeholders are time-poor, with their own agendas and preconceptions. If a business can’t get its perspective across easily it risks a different perspective filling the gap.
Tell a simple, compelling story
The most important step is to draw out the simple, compelling narrative for the deal (or against it in a defence) then create a central point where people can get the definitive version of the truth. Sometimes a business’ own website can serve this purpose but internal approval processes and limited internal resource commonly mean a small, focused and easy to update deal microsite is a better option.
When Bayer and Monsanto announced their transatlantic combination they published a detailed deal site, advancingtogether.com, with a prominent video featuring both CEOs discussing the benefits of the deal. The clear messaging and the rapport between the two CEOs demonstrated to their shareholders their clear support for a mutually beneficial transaction. This is an important platform for future developments and later integration.
Defend against poor fit
50% of executives in a McKinsey survey said cultural fit lies at the heart of a value enhancing deal while 25% called out the lack of it as the key reason for failure. Aon found similar results, with cultural integration issues the second most commonly cited reason for deal failure, far ahead of poor strategy in 5th and too high a price in 9th. Cultural due diligence is critical to creating value (and, unsurprisingly, lack of fit is an important defence to a hostile bid).
Prepare for the marriage, not for the wedding
Getting a deal over the line requires a great deal of management time and skill. But just as important is effective integration afterwards. Businesses need to maximise benefits while limiting costs such as organisation disruption, loss of talent and decreased employee engagement. Yet 58% of companies surveyed by Aon did not have a specific approach to assessing and integrating culture. This rose to 68% among firms who lost talent at a higher-than-normal rate during a transaction.
All deals, regardless of how friendly, will always unsettle some colleagues. The best way to combat this is with a focused, high impact communications campaign aimed at helping colleagues understand the rationale behind the deal, what will be expected of them and the opportunities available.
Find hard to reach shareholders
In the majority of deals shareholders are easy to identify and reach but additional steps may be needed in specialist situations, for example if a business has a large and disparate retail shareholder base. In these cases the traditional channels may not be enough, which can be where advertising comes in to play.
When US ATM and Point-of-Sale provider Diebold sought to acquire European competitor Wincor Nixdorf they needed a significant number of Wincor’s retail shareholders to tender their shares. They embarked on a digital and newspaper advertising campaign to raise awareness of the deal and prompt its shareholders to take action. The campaign was ultimately a success, with the two businesses combining to become global leader Diebold Nixdorf.
Get in touch
If you’d like to discuss how you might to use creative comms to maximise value in deal situations feel free to drop one of us at MerchantCantos a line. You can reach me at [email protected].