It has been established that directors, along with their long lines of advisers and lawyers, are the ones that make the decisions when it comes to takeovers and M&As. Once the negotiations have been carried out, involved parties are then going to agree on terms and contracts are then signed. Once this is done the deal is considered sealed.
However, this is just but the beginning of the process. In cases where a publicly listed company gets an offer, an approval needs to be secured first on what can be considered as the target company’s ultimate owners, the shareholders. This constituency can be made up of conservative retail shareholders or savvy fund managers in hedge funds and major financial institutions. This is the reason why communications with them need to be measured while also acknowledging the various responsibilities, roles, and even sophistication if one were to secure their approval on any given deal. While it is pretty common for offers to start in the boardroom, companies that are publicly-listed will have to procure first the approval of its shareholder before it can take further actions.
Presenting the deal right
The key to effectively communicating with the shareholders is to come up with a strong narrative to not only to target them but to also show to them that the price that is being offered is final as it is fair. Of course, it should not only focus on the offer’s merits too. It is very important that the possible consequences in the event of the non-acceptance should be outlined as well. Certain developments have also been known to trigger shareholders to act on offers as long as they are made aware of its present development, as well as of the implications if they decide to dissent.
Handling unsophisticated investors with care
The share register of any target company can be made up of thousands of individual retail holders, small ones, who may have PCBs to hold their shares. Depending on their presence-size, identifying these shareholders is essential so they can be contacted in order to reach the necessary thresholds for acceptance. This is where external proxy solicitations team like Boudicca Proxy can step in to reveal who these previously hidden shareholders are in order to harness their support and getting them convinced.
However, particular care needs to be taken when mailing and calling individual retail shareholders since they tend to be more unsophisticated investors. This is also why tailoring public announcements and disclosure with this in mind is very important.
Dishing out rebuttals
M&As are expected to bring out shareholder activists and even the vocal financial analysts. This can result in an offer that was proceeding smoothly to be fraught with loss of confidence not only among the shareholders but in the market too. A good way to limit this is to build bridges with prime brokers. Creating an environment where they will feel less need to get their reservations expressed publicly will be ideal.
Anybody who wants to secure the favour of the shareholders needs to communicate with them effectively. Learn more about the need for shareholder engagement and communication by reading about Boudicca Proxy online.