Matthew Sherman is a founding member of Joele Frank, he was named President in August 2013. Sherman has 20 years of experience in providing strategic corporate, financial and crisis communications counsel to Boards of Directors and executive leadership of public corporations and private equity firms involved in M&A, hostile takeovers, proxy contests, shareholder activism defense, spin-offs, reorganizations, financial restructurings, management changes, litigation, regulatory actions and a wide range of corporate crises.
Christopher P. Skroupa: What is the best communications strategy to get shareholders on board for a transaction?
Matthew Sherman: It is critical to clearly articulate the benefits of the transaction on launch day. Then, in order to build momentum and support, follow up and have one-on-one conversations with your shareholders. Sometimes, we are hired to help resurrect a deal after a launch goes badly. If shareholders are upset, you need to quickly find out the reasoning behind it: either it’s caused by the transaction fundamentals or an uninformed perception. Address those concerns head-on before they gain steam and become an accepted reality.
Skroupa: What tips would you give Investor Relations and Public Relations Officers for a successful cross border deal?
Sherman: Local market knowledge is key. In some markets, in order to determine a successful outcome, the support from labor and government representatives is as essential as shareholder support. Make sure you have the best local communications and investor relations advice as well as a prior understanding of the sensitivities and the path to get the deal done.
Skroupa: What are the main Investor Relations and Public Relations challenges when dealing with a hostile takeover?
Sherman: Opposition and lack of predictability. Communications during a hostile takeover is the Olympics for IR and PR. The opposition inherent in a hostile M&A creates challenges as well as opportunities. It causes companies to rethink what and how they communicate with their shareholders. From the target’s perspective, shareholder messaging needs to address the terms of the offer that are relative to the company’s standalone plan and prospects. From an acquirer’s perspective, messaging needs to enlist the support of the target’s shareholders without alienating its own shareholders. Messaging around the roadmap to completion can be equally as important as the value proposition itself.
Communications in hostile M&A are fluid, the need to remain flexible and act quickly can be a challenge for some corporate cultures. While some planning is possible, the precise tactics used will depend on how and when events unfold as well as how the acquirer or target responds. Although daily team calls including the company’s advisors might be prosaic, they are quite necessary.
Skroupa: How can daily shareholder communications help to prepare management, if a deal emerges?
Sherman: In order to be able to adequately respond to an offer—whether friendly or contested, you must know who your shareholders are and understand how their expectations align with a company’s short-term and long-term shareholder value proposition. Ideally, a company has previously discussed its views about M&A, including any acquisition criteria, so that shareholders are not surprised by a decision to make, accept or reject a proposal.
Christopher P. Skroupa is the founder and CEO of Skytop Strategies, a global organizer of conferences.