Key Takeaways from Annual Tulane M&A Conference
By Phil Denning & Anton Nicholas
Each year, leading lawyers, bankers, PR professionals and other advisors focused on M&A and shareholder activism convene in New Orleans for the annual conference of the Tulane Corporate Law Institute to discuss the latest developments and trends in the area of transactions and corporate securities law. As regular attendees, we have seen the conversation evolve over time in a number of key areas affecting IR and PR practitioners and the following includes some of our takeaways from this year’s event.
Interestingly, and perhaps unique to this conference, the most heavily attended panel is one specific to the dynamics around media coverage of M&A. The panel was moderated by Rob Kindler, Global Head of Mergers and Acquisitions at Morgan Stanley, and featured the Wall Street Journal’s David Benoit, New York Times’ Michael de la Merced, Bloomberg’s Alex Sherman and David Faber of CNBC.
As expected, the panel included clever banter about the breaking of leaked transactions and who could possibly be responsible since it “couldn’t be the bankers.” That said, it developed into an interesting conversation around the challenges reporters face with social media, with Benoit from WSJ and Sherman from Bloomberg both noting that their subscribers demand to get the news first, which often leads to them losing control of the narrative around the stories they break. While they are encumbered by waiting periods, other news outlets are able to match their stories and comment immediately. The waiting periods are as follows:
• A WSJ reporter cannot post their story or tweet a headline until the story has been on the Dow Jones Newswire for three minutes (admittedly an arbitrary number)
• Bloomberg must allow for a 15 minute delay before posting to social outlets
The reporters also shared some of the challenges of reporting on breaking news within traditional media platforms.
Sherman from Bloomberg shared an anecdote of a story he had on a large transaction, on a Sunday evening. He said that he was frantically trying to assemble his sources, gather his editors to vet the sources, work on the headlines and to get the wire copy ready. All the while, anticipating that someone else could break the story and wishing he could just send a tweet to claim his scoop and then let the story unfold over time.
David Faber said that he has broken news via Twitter before, but only on very rare occasions. In one instance he learned of a deal that was to be announced imminently. Since he was traveling, he knew he would not be able to get in front of a camera any time soon, so he sent a tweet and followed-up with his story when he could get on air.
Not surprisingly, the four reporters, collectively, could only recount ONE instance where a deal closing was considered newsworthy: David Benoit wrote a brief story on the Dell deal closing, following the protracted saga. In the absence of those types of special situations, reporters have NO interest in covering a deal closing.
Overall, there is anticipation that President Trump and his administration will be deal friendly. However, one suggestion was that in articulating the rationale for M&A, companies should focus on the expected growth opportunities, rather than focusing on synergies and headcount reductions, in order to avoid being a target of a presidential tweet.
Not surprisingly, like all M&A discussions these days, the dominant conversation piece on the agenda, in the hallway and at dinner, was shareholder activism, with an increased number of panels dedicated to the subject.
While not new, there seems to be an increasingly shared belief that cooperating with activists rather than applying the age-old practice of a circling the wagons and adopting an adversarial or hostile posture toward dissident shareholders is a better strategy. This was highlighted by an Activism panel discussion between a representative from Trian Partners and the CEO of Bank of New York. They shared their respective views of shareholder activism and its effects on management, directors and investors.
Lastly, there was a panel that discussed the challenges of managing deal announcements, preparing for leaks, the risks of leaks, and responding to leaks.
During a private round ICR hosted with journalists, lawyers, bankers and proxy advisors, we identified five key take away themes:
1. No one likes bad news. Finding effective ways to demonstrate the threat to clients so they can act before it’s too late is a critical challenge. We all want to believe it can’t happen to us, but all attendees commented on how that false sense of security and a failure to acknowledge the imminent threat resulted in worse outcomes because it was simply too late to mount an effective campaign.
2. Activism is an IR battle and a PR battle. Telling a more compelling story is key to victory.
3. Journalists echoed that sentiment, questioning why clients don’t recognize the importance of the media and its coverage of a “situation,” noting that its always better to talk to them than to ignore them.
4. Reiterating the theme from the Activism Panel noted above, the attendees universally agreed dialogue and negotiations are a better first step versus putting up walls and going to war. So, consider giving ground in return for a standstill; and,
5. The pace of inflows to “activist” funds is slowing. But that’s because more traditional funds are allowing broader charters to include activism. So don’t be fooled that the pace of activism will slow, it is actually just changing forms and becoming more mainstream …. which means campaigns will likely become less contentious, but they will be more prolific.
We will watch with interest as the year unfolds to see how the field of M&A and shareholder activism communications evolves, and with it, the important role that we and other strategic communications firms play in this important space.