With M&A activity at an all-time high and no end in sight, IR professionals can find related communications to be especially challenging. NIRI Boston welcomed a distinguished panel with relevant and recent M&A experience to discuss the nuances of communicating in such an environment from the viewpoints of the acquirer and the acquired:
- Ron Sege (CEO, Echelon Corporation) – Panelist
- Robert Nault (General Counsel, Constant Contact) – Panelist
- Jerry Sisitsky (IRO, Constant Contact) – Panelist
- Christine Simeone (Exec. VP, Lois Paul and Partners) – Moderator
In setting the stage for the discussion, Christine Simeone noted that unique challenges for IR professionals in M&A situations can include bridging the communication needs of Boards of Directors, senior management and Wall Street constituents, extracting information about the ‘other party’ in the transaction, effectively conveying the merits of the agreement to all stakeholders and often garnering shareholder approval for the transaction.
In his comments and in answers to questions, IRO Jerry Sisitsky emphasized the benefit of building solid relationships with major shareholders, in-house legal counsel and other members of the executive team long before any M&A transaction arises. This, in turn, will earn the IRO a seat at the table for important decisions as an M&A situation gets underway.
Enlisting shareholder support requires, in addition to solid working relationships, that an IR professional be able to justify the acquisition price even if a premium is being paid, Jerry said. In-depth knowledge of the acquiring company’s capital allocation strategy and the benefits of the transaction to all parties are also critical at such times.
Current public company CEO Ron Sege, a veteran of numerous acquisitions as both acquirer and acquired, stressed the importance of IR involvement in the messaging. He noted that “the story” supporting a beneficial M&A transaction normally exists before the transaction begins to move forward. Its benefits are apparent, particulars come into focus and IR can then lead the development of those elements into a cohesive messaging initiative.
Mr. Sege cited three benefits of providing clear messaging that involves IR in message development: (1) preserving the value of the acquired company; (2) increasing the probability of the transaction’s successful conclusion; and (3) ensuring the acquirer understands the acquired company’s markets, customers and employees.
Legal counsel Robert Nault indicated that legal counsel sees all communications in terms of proxy disclosure rules. Teaming with IR in communication planning is beneficial to all interests. The IR and Legal teams, for example, are instrumental in assuring all employees clearly understand the nature of what they can and cannot communicate during a transaction. These two teams should work together to ensure that Reg. FD is fully complied with at all levels.
In summarizing their comments, the moderator and panelists offered the following pointers to IR professionals involved in M&A:
- Build relationships long before they are needed.
- Include a “plan B” in your communication planning – there is always a chance that a proposed M&A transaction will fail. Think about: “what then?”
- Temper expectations regarding merger synergies – acquisitions can take a long time to ‘pay off’ and, oftentimes, assumptions regarding roles and product lines can change well after the acquisition’s completion.
- Remember to communicate with your employees open and honestly post announcement. This audience is often overlooked.
- Repeat your key messages over and over!