PR in mergers and acquisitions

Mergers and acquisitions, due to their significance for organisations, need good communication. A perfectly structured deal flow often counters fear and resistance in the organisation, to ultimately fail. Barriers grow in particular below the top management level


Therefore lack of sufficient information or diverse priorities at operational levels can become a serious obstacle. Does it happen that space of the Public Relations advisors is mismanaged and underestimated?

Piotr Olejniczak: Mergers and acquisitions are transactions decided by Management Boards, Supervisory Boards and Shareholders/Partners.  From the perspective of roles in the transaction reference can be made to its ‘sponsors’ and leader/leaders. If the given company does not have requisite competencies – it reaches for support of a professional advisor and a project manager in parallel. It is jointly his role  and the client’s  to identify significant issues (including risks) for the transaction and to seek approval of the action plan by the sponsor (person/persons controlling the company, Supervisory Board etc.). At the end of the day, it is up to their decision and weight they attribute to questions of internal and external communication whether, and at what stage, the space is opened for the PR advisor.  Likelihood of the involvement of such professional(s) is greater, if the company used earlier similar services in its core business or it is a public company.

Insofar as fears/resistance are concerned,  I noted them rather at the side of employees of the targeted  company. At the buyer’s  side they are more scarce (may emerge e.g. in case of a merger), but they also require identification and appropriate actions in advance, i.a. the  PR ones. For the mitigation of the influence of those negative factors it is important that the transaction is implemented swiftly – if it protracts to more than few months (6-7 months), the probability of its failure increases substantially. A  greater involvement of the employees of the acquiring party at the pre-conclusion or pre-announcement stage may help with better understanding of its sense and potential benefits.

Does it happen that the deal dynamicsdoes not allow for precise planning and decisions have to be taken on the day-to-day basis? Do elements of chaos come to being?

The value added of the leading advisor in the transaction is such management of the process, so as to prepare it properly and then coordinate actions taken by the client and his other advisors. If he performs well and he has adequate partners (a project leader and project teams at the client’s  side,also accounting, tax and legal  and other advisors)  – there should be no chaos, unexpected turns of action notwithstanding.

The following is needed though: open and regular communication with the client, good understanding of the transaction environment and of all the interest holders as well as the keeping track of media. Then,  making decisions on the day-to-day basis should not be a problem.  The need for 24/7 work can be more challenging as it is the case from time to time.

Massive operations on the open business heart is more than a one-off clearing. In most cases, they are one- or even two-years long recovery processes. This is when the patient needs special care in the soft areas of management. To add the fact that markets are not waiting in the vacuum, and in the midst of that situation there are always people subject to strong emotions. Statistics are merciless; more than half of unsuccessful transactions are attributable to the gap between the organisational culture and lack of the understanding of priorities. Would you agree?

The divergence in the organisational cultures  and lack of precisely defined priorities (what we want to attain, why and over what time) are frequent causes of transaction failures.  Beside, I would mention underestimation of potential risks and insufficient preparation of the transaction – so as to manage them efficiently.  Another aspect is the absence of internal structures to implement and digest the transaction, but also mistakes in communication with the seller and staff of the acquired company.

Though mergers and acquisitions are a substantial and risky processes, globally the numbers and value of this type of transactions keep growing . Is this an element of an economic cycle or may be developments resulting from specific trends; giving of meaning to managerial existence?

Certainly the business cycle exerts impact on the global volume and value of transactions, but  they are also concluded in the so called difficult times and with varying intensity in different sectors and regions.  The recently stressed trend of satisfying shareholders by the managers in the short-term perspective is also reflected here.

Which transactions, in your opinion,  scored greatest success in Poland and why?

First, let’s define  what we mean by a transaction success. In a very simple this will be adding value for shareholders or sponsors of the project, which can be verified after an agreed time by a reverse transaction or an appraisal. Or by reaction of the public company’s share price to the announcement/conclusion of the transaction.  More widely  – reaching numerical and soft objectives, defined in advance. What was considered to be a greatsuccess upon the transaction conclusion, may turn into a Pyrrhic victory from the time perspective.

There are many examples of successful transactions in Poland, both private ones and privatisations. Among those with closed positions and realised profits, let me mention  the Abris Capital Partners’ investment in Alumetal.  And out of those building long term value and competitive position – a series of Maspex transactions, starting withacquisition of Kubus still in 1995, through the takeover of Lubella (2004) and many others. They demonstrate that acquisitions are a part of the Maspex development strategy, and the company pursues  them very rationally, building success in the long-term perspective.

What would be your message to a PR expert, who wants to deal with communication in the merger and overtaking process? Is there any „golden advice”?

The key is to comprehend expectations and build relations with persons involved in the transaction: starting from the sponsor, leader, to end up with the leading advisor. Later, getting familiar with the environment in which the client operates and the purpose of the transaction.  This is of major importance for cooperation with the PR advisor,  especially in the „hot moments” of the process.

Do you believe that companies and experts responsible for the merger and takeover transactions need Public Relations services? If so, why?

Demand for PR services comes up in case of bigger, more complicated transactions. Especially when we talk about entry onto foreign markets and/or work with public companies. It is here that the game is played on may fields, and the stake is high – it is not worth ignoring the communication aspect.

 

„Piotr Olejniczak has been active as a corporate finance advisor from 1994. He advised Polish clients and international corporations on the occasion ofseveral M&A transactions, privatisations as well as consolidation and restructuring projects, also abroad  (France, Germany, Ukraine). Recently, he was a Director in the Capital Markets Departmentin IPOPEMA Securities and cooperated with and international network of  advisory companies http://www.mergers-alliance.com/. Earlier he worked for KPMG Corporate Finance (Associate Director), BRE Bank (presently mBank) and started his career with Doradca Consultants Ltd.  He is the Master of Economics (University of Gdansk, diploma cum laude) and completed post graduate studies in corporate and capital markets law (Warsaw University). For more details see https://www.linkedin.com/in/piotr-olejniczak-41b4681