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Effectively communicating with investors during a merger or acquisition demands meticulous planning and strategic expertise. M&A transactions require heightened attention to detail and strategic messaging. Despite the critical nature of communication during M&A activities, many organizations grapple with discerning what information to share and, equally important, what to withhold. Any statement made can hold significant weight and can even affect whether the deal eventually closes.

For a company planning to remain publicly traded after a merger or acquisition, maintaining investor trust is paramount. Transparency and clear communication become even more crucial during times of change. Investors rely on timely and accurate information to make informed decisions about their investments. Therefore, a company must prioritize open communication, provide regular updates, and address concerns promptly.

A comprehensive communication plan for M&A should include four distinct components:

1. Develop a clear and concise message

Craft a clear and concise message that outlines the strategic and financial rationale behind the M&A, including its alignment with the company’s long-term objectives and vision and how it will create value for shareholders.

One or more of the following considerations should be included in your messaging:

  • Strategic Alignment of the Transaction

Highlight how the deal fits into the company’s broader strategic and long-term vision. This will convey a clear sense of purpose and direction.

  • Market Expansion

Show how the transaction grants access to additional markets (e.g., geographic, vertical) or strengthens your presence in an existing market segment.

  • Synergy Realization

Emphasize how the deal enables shared resources to streamline processes and reduce overhead costs. Synergies also can accelerate innovation on the development side and growth on the sales side.

  • Value Creation for Shareholders

Illustrate how the transaction is expected to drive revenue growth or increases profitability. Perhaps the deal improves the company’s competitive positioning, which could lead to higher market valuation.Be honest about the opportunities and challenges associated with the transaction. Acknowledge potential disruptions such as leadership changes, cultural differences, or integration complexities. Highlight the steps the combined companies are taking to address challenges effectively. This could include implementing change management strategies, providing support for employees, or creating cross-functional integration teams.Avoid making unrealistic promises or minimizing potential risks. Transparency is essential to uphold trust in the investment community.

2. Communicate proactively

Ensure continuous communication with stakeholders throughout the M&A process, from the initial announcement to the deal’s closure. Promptly address any updates or developments to ensure investor confidence. Schedule meetings and conference calls with investors to discuss the details of the M&A transaction and to answer any questions they may have. This provides an opportunity to communicate additional context and address any concerns with investors directly.

Be prepared for a variety of reactions from investors including excitement, concern, or skepticism.  Anticipate possible questions and be prepared to provide thoughtful answers.

3. Offer supporting materials to enhance understanding

Provide supporting materials, including press releases, financial forecasts, and investor presentations to investors to offer further context and provide additional transparency regarding the transaction.

Develop comprehensive investor presentations highlighting the benefits of the M&A, including cost synergies, revenue growth opportunities, expanded market reach, and enhanced or additional product offerings. Be sure to address potential risks and concerns as well. Key information to incorporate are:

      • Financial details of the transaction
      • Strategic rationale
      • Analysis of the market and industry
      • Integration plan
      • Financial analysis and expectations
      • Risk and mitigation strategies

4. Continue to engage with investors

Maintain regular updates with investors after the M&A transaction is completed regarding the integration of the two companies and the realization of synergies. Synergies can vary depending on the deal, whether it’s revenue synergies, cost reductions, or integration initiatives. The management team must determine the important metrics to provide and give regular updates on those metrics. Continued communication demonstrates accountability and supports the company’s commitment to delivering shareholder value.

An effective way to update investors after the acquisition is to host an investor day within a year of the closing of the deal. An investor day gives management the opportunity to discuss the transaction in more detail. Here, the company can provide updates on the integration process, showcase the combined strengths after the transaction and reaffirm its commitment to building shareholder value.

As a company continues to connect with the investment community, it is important to gather feedback from investors, to evaluate the effectiveness of the company’s communication efforts. Conducting a perception audit is an effective way to determine investor sentiment. The audit can help identify gaps in communication, reveal any misunderstandings, and measure the success of communication efforts.

Be prepared to adjust your approach if certain messages fail to connect or if misunderstandings persist.

By thoroughly addressing these four items, companies can strategically and effectively communicate M&A transactions to the investment community. This proactive approach ensures clarity and transparency, helping investors gain a deep understanding of the strategic rationale behind the deal and the potential benefits it offers. Through transparent communication channels, companies can foster trust and confidence among investors and sell-side analysts, paving the way for long-term value creation.

Sharon Merrill Advisors helps companies to effectively communicate with the investment community and navigate the challenges that come with a capital markets transaction. We provide strategic support and high-level counsel based on our decades of diverse IR experience across a wide range of companies and industries. Contact us to find out how we can support your IR efforts.

Learn about Sharon Merrill Advisors’ Transactions & Specialized Programs practice.