The importance of a clear and well executed public relations strategy can sometimes be overlooked when a corporation is in the middle of negotiating a merger or acquisition. However, involving your PR team early on in the transaction can pay off in the long run. In a study done by City University London’s Cass Business School, researchers found that the chances of closing a deal successfully can be increased by having a PR team involved during the early stages of deal rather than waiting until the ink is dry and an announcement of a successful merger has to be made. The study found that when the parties to a proposed transactions publicly announced an offer, the transaction closed successfully 84% of the time, compared to just 50% for deals in which the parties failed to make a public announcement and instead merely responded to press inquiries once news of the deal leaked. During acquisitions, when CEOs of both the target and the acquirer made public statements regarding the deal, the success rate of the transaction was as high as 91%, compared to just 67% where public announcements were made without direct quotes from the CEOs of the companies involved.
The importance of a well thought-out public relations strategy can go beyond just getting the deal closed. Increasingly consumers are paying attention to combinations of large corporations and how such mergers or acquisitions may affect them in their day-to-day lives. In the past, consumers have been mobilized by corporations opposing a proposed merger between competitors by taking out advertisements and using social media campaigns that claimed the proposed transaction would lead to higher service fees or less choice for consumers. Such campaigns have led to consumers protesting such mergers and writing to regulatory bodies in opposition of the proposed deal. Starting a public relations campaign early that shows the benefits of a proposed transaction can prevent such anti-merger campaigns from taking hold and creating regulatory and PR problems down the road.
The author would like to thank Olga Lenova, Articling Student, for her assistance in preparing this legal update.
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