One of the critical mistakes that acquirers make is the mismanagement of Announcement Day, which usually arrives in the form of a carefully staged conference call packed with journalists and analysts — and plenty of excitement. Then investors react to the acquirer’s presentation. For the majority of companies, those reactions come as a harsh surprise, with the acquirer’s stock dropping — investors feel the pain immediately.
The Success of Your M&A Deal Hinges on How You Announce It
Three questions to guide your communication strategy.
April 27, 2022
Artur Debat/Getty Images
Summary.
The M&A process is complicated and often perilous. Many deals are doomed from the outset. After the initial deal announcement, investors react negatively and the acquirer’s stock drops. That’s why companies need to do a better job of managing Announcement Day. Rather than treating this crucial day as a simple comms exercise, acquirers need to tell investors and other stakeholders about the logic of the deal so that they understand why and how additional value will be created in the future—especially if a premium is being paid. If they don’t get it, they will flee.
To improve Announce-Day performance, acquirers should be able to answer these three questions. Do you have a credible case with defendable and trackable synergy targets that you can deliver and that investors can monitor over time?; Does your story help reduce uncertainty and give direction to the organization so employees can effectively deliver?; and does your presentation convincingly like post-merger integration plans to the economics of the transaction?