Navigating the Complexities of M&A

M&A today is complicated. It always had been of course, but the confluence of constantly evolving regulations, the ability for stakeholders ranging from shareholders to employees to express discontent using an expanding array of platforms and a plethora of M&A reporters being paid to publicise deal negotiations before they are announced has made not just negotiating deals more complicated, but managing the messaging around them more complex too.

For the second consecutive year, H/Advisors has conducted a comprehensive analysis aimed at taking some of the guesswork out of one of those complicating factors – managing deal leaks. For those negotiating deals, a leak can complicate the process, sometimes enough to terminate negotiations entirely. Stock prices move in unexpected and occasionally unhelpful ways. Employees get nervous. Customers have questions. Politicians or regulators may too.

Our analysis showed that large-value M&A continues to leak at a high rate even as deal volumes overall globally have fallen. Two out of three of the largest 20 deals by value in the first half of the year leaked before the official announcement. Some were just minutes or hours before announcement, but others were a month or two or even four months before they were announced. Those companies managed to navigate choppy waters to get their deals across the finish line, though undoubtedly they had to make adjustments in their negotiating and messaging strategies along the way.

In our experience, understanding how those leaks can impact the deal process gives companies and dealmakers a chance to manage that uncertainty more effectively. Waiting until a leak occurs to determine how you will respond can leave you a step behind. As you can read in our report, planning is key. No leak can be planned for perfectly, but having a process for making decisions quickly on how to respond, if at all, can shorten response times and help keep some of the subsequent anxiety and uncertainty in check. Effectively managing a leak situation can also help to preserve the viability of the deal negotiations themselves.

You also need to understand the regions in which your deal is being negotiated, as regulatory requirements regarding transaction rumours vary country by country. Some countries, like the UK, require a full disclosure of negotiations after a leak, and set a time limit on how long negotiations can go on. In others, like the U.S., the stock market authorities can demand companies listed on their exchange publicly provide some clarity on what is going on behind the scenes. All of this should be planned for in advance.

In today’s environment, we often tell our clients negotiating deals that it is not a matter of if the discussions will leak, but when. As the web of people that know about negotiations expands, so too does the likelihood that someone with knowledge will tell a reporter what is going on. Proper communications planning can help protect the integrity of negotiations even in that scenario. Which, unfortunately, as the numbers show, is getting increasingly likely.

Click the link below to find out which major deals leaked and the key steps to building a strong M&A communications plan in H/Advisors Global M&A Insights and Outlook report.