We are shifting toward a society in which social media is the main way that companies market themselves to the world. Social media allows companies to show their personalities and to interact with clients. Any forward-thinking company knows that social media is a key part of its brand image.
Since social media is so popular, it’s no surprise that it is now an important part of the due diligence phase of mergers and acquisitions transactions. In recent years, there has been increased use of social media by potential acquirers in order to identify target companies. A 2013 survey by Deloitte should that over half of corporate development executives used social media for this reason. Social media can play a huge role in whether a merger or acquisition succeeds. While social media has a lot of benefits having to do with convenience of communication, there are also a couple of other benefits specific to mergers and acquisitions.
After a merger of acquisition, social media can be utilized for reassurance. Just as customers can sometimes be hesitant to gain their products and services from the newly structured company, new business partners may be wary of starting a new business relationship. Sometimes partners don’t see the potential value that could come from a merger or acquisition. Through social media, customers and potential business partners can be reassured of the advantages of reorganization. For this to be effective, a company must have a consistent and centralized social media presence. Both the presentation and the content should demonstrate that the reorganization is improving the company’s strategic position.
Social media can also promote collaborations after the merger has occurred. Mergers and acquisitions can have a lot of pitfalls, leading many of them to fail. The use of social media can prevent this by promoting effective communication across newly reorganized companies. One example of this occurred after the merger between Schneider Electric and Invensys.
After acquiring Invensys, Schneider Electric sponsored a competition inviting its employees to post pictures and comments showing what it means for the two companies to be “Better Together.” Schneider Electric donated a certain amount of money to charity for each post. This was a cost-effective and simple way to promote cross-company collaboration. Programs like this one allow companies to take advantage of how quickly social media fosters communities all around the world to build collaborative relationships.
Social media also poses a couple of challenges. One is keeping things confidential. Companies considering or involved in a merger or acquisition need to take measures to ensure that the details are not leaked through careless social media activities at either the employee or corporate level. It is important to prevent blatant posts and more subtle social media activities that can let the public know about potential mergers or acquisitions.
Another challenge is keeping things compliant. As companies utilize social media to connect with stakeholders, they must be aware of the SEC (Securities and Exchange Commission) requirements pertaining to those announcements. Legally, a company can make a public statement relating to mergers and acquisitions on the condition that the statement contains a legend. The legend must urge investors to read relevant documents with key information filed to be filed with the SEC. It also must explain that investors can get these documents from the SEC for free, and it must describe which ones can be obtained from the statement-making company free of charge.
While there are some confidentiality and compliance challenges, social media can be an extremely beneficial part of your company’s post-merger or acquisition plan. Whenever a merger or acquisition occurs, there is a large chance that it won’t work out. But the use of social media can decrease this chance significantly. By reassuring partners and promoting collaboration, social media can make a world of difference in mergers and acquisitions.