Roughly 42% of multibillion-dollar deals leak early - and the scoops are hurting companies' marketing strategies
- Though companies work hard to announce deals on their own schedules, 42% of deals made between 2015 and 2018 were leaked ahead of their reveal, according to a report by communications firm Abernathy MacGregor.
- Takeover leaks can significantly harm companies' marketing strategies as well.
- The firm found that leaks lead to vastly decreased media attention on announcement day, as investors and analysts have already mulled over the news.
- Companies should stress confidentiality from the highest levels and establish a communications plan early to best curtail leaks, the report's authors wrote.
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Despite the time, effort, and money that goes into keeping colossal deals secret, nearly half of all acquisitions go public before an official announcement is made.
Of takeovers worth at least $5 billion, 42% were leaked ahead of their reveal, according to a report released Thursday by communications firm Abernathy MacGregor.
Merger leaks are even eating into company's marketing plans. Leaks take the wind out of an official reveal, as the news is less surprising and crucial details have already been considered by the press, investors, and analysts.
First-day attention following merger news - whether in the form of a leak or an official reveal - drives a 292% jump for bidders and a 552% surge for targets over their 12-month average monthly news volume, according to the report. Yet when a deal is leaked beforehand, bidders only see a 103% jump in volume on announcement day, and targets' volume only rises 29%.
"At a time when businesses are under increasing scrutiny from employees, customers, politicians, regulators and, of course, investors, every moment in the spotlight needs to be carefully managed," the report's authors wrote.
The firm found leaks break an average 11 days before official reveals. It also recommended companies stress confidentiality from the highest leadership level and establish communications strategy early to be best prepared in case of a leak.
"A deal is likely the highest profile news event of the year for any company, and creates an extraordinary moment of attention," the report said.
The report, titled "When Deals Spring a Leak," covered 189 acquisitions from 2015 to 2018 that involved at least one US-based entity. It defined "leak" as any deal-related media mention naming both the bidder and target firms ahead of the companies' own announcements.
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