No, I'm not an investor, acquirer, nor am I an investment advisor to companies that are interested in a capital raise or M&A (mergers and acquisitions). I'm the CEO of a public relations firm for technology companies. So what do I know about M&A?
In our tech PR business, we do spend a lot of time with clients helping them leverage PR and digital communications in order to support their corporate goals, which often times includes M&A activities. So, we often get asked the next leading question, "how is the marketplace today?"
I just co-conducted a webinar where I teamed with Gretchen Guandolo, managing partner of Clearsight Advisors, a leading merchant bank here in DC, to address this very topic. The slides from the webinar as well as the digital recording are available here on our website.
Gretchen made the following comment to me, which is exciting for multiple reasons:
“While 2011 was an extremely strong year for M&A, all indications are that 2012 will be even stronger. Private equity firms continue to sit on nearly a trillion dollar stockpile of un-invested capital and strategic buyers have built sizable war chests to fuel growth via acquisitions. The level of M&A activity thus far in Q1 is on pace to exceed the prior year.”
I took note of the data available and research pointing to how hot M&A will be in 2012: most of our resources are saying similar things: the investment marketplace seems to be "hotter" than "not" and thus, it makes sense that now more than ever, PR for M&A or capital raises should be a part of a companies' marketing program if it's a desired outcome.
It is well understood that the conditions that are best for strong M&A activity are when:
1. interest rates are low
2. buyers have high cash balances
3. capital gains remains low
Since these conditions are all true at the moment, at least for 2012, it bodes well for those companies interested in pursuing opportunities to grow via M&A.
KPMG and Wharton just conducted a survey indicating that the conditions are right for increased M&A activity this year, due to increased cash reserves and low interest rates. According to the sources in the survey, on the buy-side, 7 out of 10 companies expected to make acquisitions this year, up from 57% in 2011. Chart from the report:
Richard Jeanneret of Ernst and Young shares some results on a CNBC clip from their Capital Confidence Barometer Survey - 1,000 C-suite executives were surveyed on their confidence level in the market. Relating to M&A, CEOs want to do deals next year. Fundamentals are strong as ever, cash reserves in excess of $2 trillion, and other conditions make the market ripe for M&A, regardless of this being an election year. Of course, no one can predict the future, but it's an educated guess.
When it comes to leveraging PR for capital raises, however, it's a tougher nut, since many companies need money to invest in PR so they can raise capital, but they can't get the money until they invest in PR. Classic case of chicken or the egg. Sometimes PR activities should be done in house in the beginning stages, with the marketing team or even the founders of the company...create as much buzz as possible in the right places, and be very, very focused in your efforts so you don't waste time. Then, when receiving your initial capital, you'll already have a head start! Download the webinar for more do-it-yourself tips.
What is your opinion on whether we're going to see a slew or a dearth of deals done this year?
--Elizabeth Shea, @eliz2shea
What are you doing on March 7th at 1:00 EST?
If your business goals include a capital raise, future acquisitions, or a successful exit, you should join SBX’s Elizabeth Shea and Clearsight Advisors’ Gretchen Guandolo for a webinar on PR and marketing activities that can enhance value for future capital raises or M&A activities.
Elizabeth and Gretchen will cover:
- How to land on the radar screen of the future investors and buyers of your business
- How to leverage communications to gain the most traction and exposure around a transaction
- What buyers seek in considering technologies and how your public persona can help put your best foot forward
- How PR is critical for capital raises, and when and when not to engage in PR
- What buyers look for when starting the due diligence process and how a company's presence affects that process.
- Strategic identification of select targets (investors and/or strategic buyers) and strategies for “creating buzz” within those segments
To learn more about the webinar and sign up please follow the link below.
came out with its annual ranking of top M&A deals
this week. Despite the downturned economy, the publication reported there were 77 deals in the government contracting community in 2009, down just 11 from 2008. While the number of deals was not fully reflective of the economy, the type of M&A activity highlighted is indicative of the times.
Deloittes acquisition of Bearing Points government business, named best mid-market deal, was the most direct reflection on the economy. Northrop Gummans sale of its TASC unit to private equity firms General Atlantic and Kohlberg Kravis Roberts was named best overall deal. Northorp was forced to sell TASC due to organizational conflicts of interest. Deals like this may grow in the coming years as the administration is taking a strong look at large integrators and conflicts within their numerous operating units. The feature also points out this deal marked the entrance of General Atlantic and Kohlberg Kravis Roberts onto the Washington equity scene, a sign of more deals to come?
Read the full coverage here
and let us know what you think about their picks.