Deals, Deals, and More Deals

04 June 2007

When it rains mergers and acquisitions, it pours.

The M&A frenzy continues, and today it hit the high tech sector in a big way.
Three significant deals were announced or rumored in tech land.

Flextronics announced the acquisition of Solectron, rumors were floated that private equity firms are close to buying Avaya, and Palm announced that it will sell a 25% stake to Elevation Partners (a private equity firm backed by U2 lead singer, Bono).

The investment community loves to speculate around M&A activity.  Many questions are asked, including:
What are the financials behind the transaction?
Is the transaction friendly or hostile?
Will there be any further bids from other parties?
What will the synergies be once a new company emerges?
What will the new management structure look like?

Investor relations professionals need to be prepared on many fronts:

1) Prepared to be busy – it’s guaranteed that the phone will ring off the hook for a few days (a full email inbox is also to be expected).

2) Prepared with a message – have three key positioning points and stick to them.

3) Prepared for volatility – regardless of what side of the transaction you are on your stock is likely to see lots of volume and wild upward/downward swings.

4) Prepared to be peppered from all angles – it would be great if only financial analysts were calling, but that’s not going to be the case.  Analysts, institutional shareholders, retail shareholders, financial media, main stream media, and even employees will be calling the IR department looking for answers.

Will the crazy pace of M&A activity continue to heat up over the summer months?  Only time will tell.

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