Seeing the details of an M&A (merger and acquisition) process published in the press can greatly complicate negotiations. In any M&A transaction, it is essential to maintain confidentiality throughout the entire process until the M&A transaction closes with the signing of the sale and purchase agreement in front of a notary. And yet, a recent report by the global strategic communications advisory group H/Advisors reveals that one in three M&A deals of $2 billion or more is reported to the media before it has been officially announced.
After analysing 267 transactions in 2022, the study shows some clear trends as to which M&A deals are most likely to leak to the press:
- By region, deal negotiations in Western Europe and Asia-Pacific are more likely to leak before they are officially announced than deals taking place in the United States.
- By sector, the sectors with the highest leakage rates are aerospace, defence and consumer goods, with companies owning high-profile brands.
- Depending on the volume, large transactions with a value of USD 25 billion or more are leaked up to 80 per cent of the time.
At Confianz we cannot stress enough the importance of being prepared for this eventuality during an M&A process. These operations are complex events and any leak can have a negative impact on the negotiation. For this reason it is necessary to foresee a quick and professional response.
3 reasons why confidentiality is crucial in M&A processes
When handling any M&A transaction, confidentiality on the part of all parties is crucial. The reasons for this are manifold and include:
- Prevent competitors from taking advantage of any leaked information to try to take customers away from the company for sale.
- In the case of listed companies, to avoid falling share prices and speculative movements.
- Keeping partners and employees calm, so that they are not assailed by uncertainty, demotivation and/or talent drain.
- Protect the corporate reputation of all parties involved.
Relying on a single advisor is the best way to ensure confidentiality
Hiring a single law firm to handle the entire merger or acquisition process exclusively and carrying out all actions through it is the best way to avoid the publication of leaks in the press.
This exclusivity allows, among others:
- Ensure confidentiality. Because the fewer people who know the details of negotiations, the less chance there is of unwanted leaks.
- Optimise all efforts. Because if several intermediary parties are involved, it is easy to end up with contradictory conclusions.
- Work with a fluid and fast flow of communication. Because by limiting the number of actors in the negotiation, it is much easier to transmit information between all of them.
Having a specialised M&A advisor such as Confianz throughout the entire process is the best basis for a successful transaction.
Choosing the right advisor in an M&A transaction can be complicated. In such complicated negotiations, the human factor becomes fundamental. It is always best to turn to experienced professionals such as those at Confianz, who guarantee maximum discretion, absolute trust and impeccable professionalism. The studies and experience of our team, the satisfaction of our clients and our previous success stories are our best business card.