Investor Communications: New Rules for M&A Success

Sirower, Mark L.; Lipin, Steve
January 2003
Financial Executive;Jan/Feb2003, Vol. 19 Issue 1, p26
Academic Journal
The article discusses the importance of effective communication when two firms decide to merge. Survey data indicate the shares of acquiring firms decline in value following a merger announcement about 64% of the time. Investors may shun even sensible mergers, which is why acquiring firms need a solid communications strategy. Companies need to present to investors detailed accounts of cost savings and timetables for execution. Firms should anticipate in advance and prepare answers for any questions that may arise. In justifying a merger to investors a company needs to be credible, it must act to dispel any uncertainty surrounding the deal, and it must demonstrate how the merger's benefits will outpace its costs.


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