Even though there is still an element of economic and geopolitical uncertainty, investors seem to be finding opportunities to create value, and, after a slow start to the year–White & Case reported that with 5,974 deals, Q1’2023 had the lowest quarterly tally since 2020–data is showing that the second half of 2023 will be an exciting time for dealmaking.
According to a report by PwC, 60% of corporate leaders are not planning on delaying M&A transactions in 2023, and Morgan Stanley highlights how they have the financial means to do so–M&A sponsors have over $1.8 trillion of unallocated resources. This means exciting news for startups, as the key drivers behind M&A deals have prominently featured the pressing need for reinvention–taking advantage of the acquired startups’ technological capabilities–as well as the capacity to innovate, something that emerging ventures have in heaps and corporate behemoths often don’t.
For startups, the prospect of increased dealmaking volume can generate a burst of excitement. If you are a founder, you might ask yourself, “Is my company the next one that can get acquired?”
However, before you get too far ahead, here are some things for you to keep in mind.
Why it is important to invest in PR
When a company undergoes a merger or an acquisition, it represents a set of changes for all of its stakeholders. Therefore, the firm’s executives need to ensure that the right message is communicated to all of them. For example, employees might be worried about how their compensation might change after the acquisition, or whether the culture they love will be transformed. They might even worry whether their jobs are safe.
At the same time, customers might have their own perceptions about the acquisition. For example, when Facebook acquired VR company Oculus, Oculus’ loyal backers frowned upon the deal. In another case, beer giant AB Inbev sparked the outrage of craft beer lovers by buying out British Camden Town Brewery. For both companies, this could have resulted in the loss of loyal customers.
This could have been prevented if the targeted businesses had the right public relations team in place. While an organization is in the process of merging or being acquired, the proper PR partner will work with the firm’s leading officers to ensure that the adequate message is assertively conveyed to all of the relevant stakeholders.
Also, the right PR ally will help create a case for the deal, including communicating, both internally and externally, how the deal supports the startup’s business strategy and vision and accelerates its impact.
Three Steps for an M&A PR Campaign
The main task of a PR campaign when helping a company prepare for a merger or an acquisition is to support both party’s decision to engage in the deal. In addition, it will highlight the relevance of increased M&A activity in a particular area.
There are three steps to accomplish this: preparation, execution, and the deal as-is. To set the right timing expectations, it’s key to note that M&A processes typically require 12 to 18 months from start to finish.
- First, develop a strategy. While working with the company’s founders, strategists will decide on key messages that need to be communicated, and how they will position the business and its team as experts on the subject.
- Considering internal stakeholders–like employees–can make the difference on whether there is internal approval for the transaction, and consequently, will be a deciding factor for whether the M&A deal succeeds or not.
- The campaign’s key messages should emphasize positive aspects about the company, why the company is ready to be acquired, and why the acquisition is the next right choice. Here, it is recommended to highlight the company’s expertise in the market, the strength of its team, the stability of its business model, and the growth that it has been registering in recent years, as well as the firm’s potential–once the business is acquired, how far can it go?
- Market Trends: When preparing a company for an M&A transaction, gauge the potential and present state of the market for mergers and acquisitions. Look at the relevant trends, recent deals, IPOs, and international expansion plans. For example, this article shows the rationale behind M&A drivers in foodtech. This needs to be integrated into the message that will be transmitted to the general public.
- Product Quality & Team Expertise: The right PR campaign includes press coverage that the company or the founders have received, award nominations–for example, the founder was named as one of the rising stars of the industry–columns and interviews, speaking engagements that its founders participated in, and many more. Everything that gives external validation or proof of the startup’s success is relevant to enhance the impact that this message has. At the same time, leverage the founder’s personal brand. If they already have a solid presence, use it to your advantage, and if not, find ways to build it up.
- Get To Know Your Buyers & Partners: Identifying stakeholders and building a warm relationship with them is critical for the success of an M&A transaction, and the PR campaign will help accomplish this. By taking the lead on internal communications and building trust with parties such as bankers and lawyers who are supporting the deal, they will help you stay on top of mind for industry events and conferences.
Close & Post Close
Once the deal closes, it is important to work with a PR team to develop certain preparations. These include:
- Developing a media strategy, as well as preparing for Q&A
- Making an initial announcement
- Controlling information leaks
- Establishing rules for internal communications, including what can be disclosed publicly regarding the transaction, and how integration between the two firms will take place. This involves a lot of communication as well.
To make the deal’s official announcement, we recommend using a traditional press release (news) and a formal interview. When doing this, being inclusive when communicating is something that all stakeholders will value. We suggest you use the pronouns “we” and “us” instead of “they,” as this increases the involvement that the receiving party has in the transaction. It makes them feel part of something.
In addition to this, talk about the global vision, strategy, and culture that served as the basis for the merger or acquisition, and be clear about the fundamental changes and decisions that will take place at the company. Where will the headquarters be located? Who is staying on board as CEO? What will happen to the employees of the acquired company? The more transparent you are, the more your stakeholders will feel seen and valued, and this will help your transaction seamlessly move forward.