M&A Survey: Investors and other stakeholders speaking out

New York, London, Frankfurt | April 08, 2020 – Research conducted by the global partnership of Finsbury, Glover Park Group and Hering Schuppener Consulting has found that cross-border M&A transactions in 2019 have faced a highly challenging external communications environment with rapid changes creating new obstacles to deal success. In this increasingly complex environment, specific deal objectives, such as building support and acceptance among financial and non-financial stakeholders becomes key. The conducted research consisted of a comprehensive analysis of stakeholder statements in both leading editorial media as well as on social media. The partnership believes that some of the identified communications trends will not only persist but could indeed increase in an M&A environment heavily impacted by the unfolding COVID-19 pandemic.

Key survey findings include:

Investors in bidder companies are the most vocal stakeholder group, contributing more critical public statements than analysts, rating agencies, and external experts combined: 42% of all critical comments are from investors. Within this group, investors in bidding companies are most active in voicing their concerns, accounting for 69% of all critical concerns. 64% of all negative investor quotes derived from activist investors on the bidder’s share register.

Strategy, deal certainty and price are still the dominant topics in M&A debates: Commentary from financial as well as from non-financial stakeholders remains predominantly focused on three main issues – strategy (24% of all statements), deal certainty (19%), and price (17%). Despite their prominence in broader public debate, sustainability considerations have yet to emerge as a key factor in M&A deal acceptance.

Social media is more than amplifier of editorial media – it features a distinct set of topics and commentators: Topics most referenced on Twitter are the financing of the transaction, benefits for business partners and post-merger integration, therefore diverging from the above-mentioned topics of strategy, deal certainty, and price, which are most frequently addressed in editorial media. In contrast to their limited presence in editorial media, unaffiliated third-party commentators contribute most statements (73%), with roughly one in three (34%) tweets displaying a negative tonality. In editorial media, however, only 32% of the comments come from third parties, whereas representatives of the bidder and the target company, with 45% and 23% respectively, stand at least jointly for the much larger share of voice.

M&A transactions face a high leak risk with roughly one in two deals leaking before their official announcement: 47% of the cross-border transactions featured saw information about the deal break before the formal announcement which highlights the need for preparation of the involved parties.

Whilst the current health and associated, evolving economic crisis is likely to result in a significant downturn of M&A activity in the near-term future, we believe that ongoing and future M&A transactions could face an even higher risk of vocal stakeholder opposition. With balance sheets under increased pressure, stakeholders – including activist shareholders – will monitor how companies invest their funds to manage this crisis even more closely. Furthermore, with “economic nationalism” on the rise, large cross-border projects could come under increased scrutiny from politics and regulators.

About the M&A Acceptance Survey

The M&A Acceptance Survey is a comprehensive analysis of the largest cross-border M&A transactions with a deal value of at least $5bn announced in 2019. The in-depth analysis encompasses 51 deals from 24 countries globally. In total, 1,400 media articles and almost 5,000 public stakeholder comments voiced in articles published by Reuters, Dow Jones and the leading business newspaper in 14 countries (including the Financial Times, Wall Street Journal, Handelsblatt, Les Echos, Nikkei, South China Morning Post and the Australian Financial Review) were part of the analysis. In addition, 60,000 tweets were analyzed as a proxy for wider social media activity.

The full survey can be found here.

 

Contact

Finsbury (London): Richard Webster-Smith, +44 20 7251 3801, richard.webster-smith@finsbury.com

Finsbury (New York): Peter Land, +1 646 805 2000, peter.land@finsbury.com

Hering Schuppener (Frankfurt): Hendrik Bender, +49 69 92 18 74-12, hbender@heringschuppener.com

 

About the Global Partnership

Finsbury, Glover Park Group, and Hering Schuppener Consulting are global leaders in M&A communications advisory and together form a strategic partnership.

The combination of these three market leaders creates one of the few global platforms advising clients across all communication issues, leveraging over 500 consultants in 18 offices around the world. The partnership offers high-quality advisory and execution expertise across all regions, disciplines and communication channels. The integrated international approach provides clients with cross-market access and the best and most relevant strategic counsel.

Together the firms have advised clients on their biggest challenges including M&A, leadership change, major crises and complex issues within corporate and public affairs. In the past 10 years alone, they have advised on nearly 1,600 transactions with a total value of more than $2.6tn.

More information at: www.heringschuppener.com | www.finsbury.com | www.gpg.com