Best practices and case studies on how to react quickly and effectively in a crisis situation in the M&A process.
Reading time: 4 – 5 minutes
A M&A information leak is a tricky situation that can jeopardize a company’s reputation. That is why strategically well-thought-out crisis communication is essential for M&A situations in companies. The same principles apply to reacting to leaks in M&A processes as to crisis communication in the event of other corporate crises. Below you will find important do’s and don’ts as well as practical examples.
The basic procedure for responding to a data leak in an M&A case is similar to that for other corporate crises. In this article, you will learn what you should and should not do to ensure that you act successfully in the event of an M&A leak.
Dos:
- Quick response: Immediate intervention signals that the situation is being taken seriously. Delays can increase the damage and reduce stakeholders’ trust in the M&A process.
- Transparency and honesty: Open and clear communication since hiding or trivializing the situation often exacerbates it.
- Show empathy: Those affected need to feel that they are being taken seriously. Show understanding for their concerns and offer support.
- Proactively take action: Develop clear response and action plans and an M&A strategy, and communicate progress and improvements.
Don’ts
- Keep silent about or downplay problems: This often leads to greater mistrust.
- Assign blame: Shifting responsibility to internal or external parties can further damage your image.
- Communicate in an uncoordinated manner: Contradictory statements lead to confusion and a loss of credibility.
Practical examples of successful crisis communication in the event of leaks in mergers and acquisitions, company mergers, company takeovers and company purchases
- Bayer and the Monsanto takeover (2016)
In the run-up to the takeover of the US company Monsanto, details of the planned transaction were prematurely made public. Bayer responded by issuing a short, factual press release immediately after the leak became known. The company emphasized that the takeover talks were still in the early stages and immediately held talks with investors and analysts to create confidence in the M&A process. Thanks to the early and clear communication, Bayer was able to curb any speculation.
- Deutsche Börse and the takeover of the London Stock Exchange (2016)
Information about the planned merger with the LSE was leaked to the media before the official announcement. Deutsche Börse reacted quickly with an ad hoc announcement in which it confirmed that talks were being held to take over the company, thus fulfilling regulatory requirements. In addition, an FAQ list was published to answer key questions from the media and shareholders about the M&A process. Thanks to its quick and transparent response as part of its M&A strategy, Deutsche Börse was able to maintain the takeover process.
- Volkswagen and Europcar (2021)
Information about Volkswagen’s planned acquisition of Europcar was published early. Volkswagen responded promptly with a public statement in which it officially confirmed its intention to take over the company and added that further details would only be communicated after the acquisition was complete. The company emphasized how the acquisition would contribute to its growth strategy and increase market share, thereby focusing the discussion on the company’s vision. Thanks to this proactive approach in the M&A process, Volkswagen was able to successfully influence the subsequent reporting.
Conclusion
Effective crisis communication in mergers and acquisitions requires quick action, openness and empathy. Companies that take action with a clear M&A strategy and respond to the needs of their stakeholders can maintain trust and minimize long-term damage even in difficult situations in the M&A process. If you are interested in our services, you can download our M&A factsheet for free or contact us for an expert opinion.