The Power of Politics in M&A

The Power of Politics in M&A

What 2018 UK Takeover Activities Signal for Pre- and Post-Close Integration

At a recent Breakfast Briefing hosted by Norton Rose Fulbright outlining 2018 UK M&A trends, certain themes discussed are common staples in M&A—private equity engagement, stakeholder activism, consolidation, etc. One trend that is not new, but becoming more prevalent, is the politicisation of M&A deals.

With general movement towards economic nationalism around the globe, it’s not surprising that governments are taking a greater interest in how large business transactions impact their countries and citizens. This trend is particularly relevant in takeover scenarios, which are more likely to involve heightened emotions, attention and conflict, and has led to changes in UK regulation to address stakeholder concerns. For instance, in the post-Kraft/Cadbury takeover climate, revised rules in the UK now distinguish between post-offer undertakings and post-offer intention statements to clearly differentiate binding actions from intentions or goals.

Such politicisation and the resulting regulatory changes highlight the importance of internal and external stakeholders in the M&A environment, providing targets with a new source of leverage. As targets are now armed with stakeholder voices and public attention, managing relationships with this broader range of stakeholders will become more critical pre- and post-deal. Acquirers will need to be prepared to effectively communicate deal benefits to employees, local communities, the media, elected officials and other stakeholders.

Working at BTD, I have seen the immense value of focusing on integration during the M&A process. Increased politicisation pre-deal will undoubtedly impact post-deal integration, making it critically important to incorporate stakeholder engagement and integration in the pre-deal process to get the best return on investment. Understanding this trend makes it all the more important to think ‘Beyond the Deal’ to ensure you get the most from your transaction as quickly as possible.