Mergers and acquisitions of companies are subject to the highest secrecy until the deal is finalized. But information about deals is leaked with alarming regularity.
The acquisition of the majority of shares in Swiss luxury watch manufacturer Breitling by funds from Zug-based asset manager Partners Group was scheduled for mid-December, but finews.ch was able to report details of the planned transaction yesterday.
While a story about such transactions gains the reporter of the news kudos from editors and readers, the information leaks behind them can be a curse for companies and investment bankers alike, a new survey by H/Advisors Abernathy shows. The report examines how often upcoming mergers and acquisitions (M&A) leak and how accurate journalists are when they report in advance on planned transactions.
No Secrecy Around Mega-Mergers
The agency examined 147 deals this year in which each company has a minimum value of $2 billion and a US connection.
The survey found every third transaction in 2022 was made public before completion even though all parties were sworn to strict secrecy. In the case of mega-mergers where a company was valued over $15 billion, 70 percent leaked through prematurely. The media proved to be surprisingly well-informed. In 75 percent of leak-based reports, both the buy-side and sell-side entities were correctly named. For 60 percent of all transactions, the reports were only 10 percent off the effective transaction value.
Fewer Deals, More Treachery
So there can be no talk of «fake news», especially since the details are leaked even earlier than previously. In the latest survey, details of transactions this year leaked, on average, 28 days before the formal announcement of a transaction, much This is earlier than the eleven days in previous studies.
It should be noted that mergers and acquisitions, at least in the western world, have been in the doldrums for months. As a result, advisor rivalry over the few deals has increased, and media coverage has also focused on the few deals remaining in the pipeline. For investment bankers currently grappling with an extremely difficult market environment, secrecy must therefore be a source of additional concern.
«No Comment» is no Solution
Once a leak occurs, the companies involved are thrust into the spotlight, with social media and online content playing a crucial role. According to the report, the number of parties named on social media channels increased by more than 370 percent on average in the first week after a leak.
H/Advisors Abernathy would not be a very good communications advisor if they did not have a blueprint for an eventual information leak. However, the M&A business is a different animal. When a deal goes through, everyone goes into hiding and tries to salvage what they can, while publicly expressing «no comment».
But even if the companies themselves do not communicate, they cannot prevent their stakeholders from doing so all the more eagerly.
Some salient advice on secrets comes from Italian scholar Fausto Cercignani who said «a secret remains a secret until you make someone promise never to reveal it.»
