The New Realities of Modern M&A Communications
Today’s M&A deals face far more obstacles than a decade ago. The advent of social media and an “always on” marketplace has created a platform for empowered influencers to drive the public conversation. As a result, communications professionals are challenged to filter out the noise from the data tsunami created by these new outlets. Who are the influencers that matter? How should the transaction be messaged to different audience segments? Who has the potential to derail an M&A transaction or create a crisis?
Communications teams must adapt to the new realities of M&A communications. By taking a data-driven approach with new media intelligence metrics communications professionals can better engage key stakeholders, segment core audiences and strategically plan for a successful transaction.
DraftKings and FanDuel Merge: How will the Public Drive the Conversation?
The announcement of a merger between DraftKings and FanDuel is expected to drive a disproportionate number of media mentions compared to the size of the deal. The consolidation of the largest two Daily Fantasy Sites (DFS) websites was announced in November after months of speculation. Previously the two parties spent heavily in an attempt to dominate the other in market share, but as it became clear neither would dominate the other, a merger became imminent. As with any M&A deal, there are host of challenges that will come up in the near future that the new company will have to address. Each communications team has just completed the first task: quelling any rumors of a merger before the actual announcement.
A merger of the two DFS sites will most likely face all the typical obstacles that can affect an M&A transaction. DraftKings and FanDuel are the two biggest entities in fantasy sports, so talk of a monopoly will dog the entire merger process. There have already been multiple lawsuits claiming that DFS is illegal gambling and the sites are banned in 10 states; further questioning around the legality of daily fantasy sports could also hamper the deal. Both comms teams will need to monitor the situations of these and many more issues on an hourly basis to ensure that the deal is completed with no glitches.
The merger is already off to a good start, with an overall positive reaction to the announcement.
Now, the teams need to identify the key influencers who have the potential to affect the transaction, create plans to deal with problems that can arise from any potential leaks, regulatory issues or advocacy groups, and manage the entire lifecycle of the transaction on a day to day basis. They’ll have to do all of this while dealing with the data tsunami that will arise from having such high profiles due to the estimated $750 million the pair have spent on advertising over the past two years. The valuation of both companies have also been slashed by half since 2015, with both currently worth around $1 billion. By following a set of best practices for communications, the transition can go as smoothly as possible.
Media Intelligence Data
The announcement of this merger didn’t come as a surprise to anyone, despite the past hostility between the two companies; talk of consolidation had persisted since June. However, the teams managed to prevent any leaks of the actual announcement on November 18.
As two high-profile, controversial, consumer-facing companies, the deluge of media intelligence data around FanDuel and DraftKings will be larger than almost any other recent M&A transactions. In fact, the deal incorporates a plethora of outside stakeholders that can impact the deal: the federal government, lobbyists, the media, local legislators, investors. As such, it is important for the two companies to focus on the opinions of these primary influencers and filter out the rest.
Typically, any M&A transaction can expect to have a fairly linear correlation between the size of the deal and the amount of coverage. For instance, a $20 billion deal can expect to see 20,000 media hits over the lifetime of the deal, while a $40 billion deal can expect 40,000 hits. The FanDuel and DraftKings merger has generated almost 26,000 mentions from just the announcement. This is already more than twenty times more mentions than would be expected for a merger valued around $2 billion. The companies need to establish benchmark KPI’s to track the deal throughout its’ lifetime, based upon metrics recorded from similar deals in the past. This starts by identifying the key influencers who could affect the deal and establishing a baseline number of expected mentions for each stage of the merger. Establishing benchmark metrics will allow the two daily fantasy sites to manage their resources efficiently over the next nine months.
Segment and Know the Different Audiences
Each of the different outside stakeholders that will be involved in the merger have independent motives: the federal government wants to ensure that the transaction will not create a monopoly that hinders competition; local governments need to make sure that DFS are in compliance with local gambling laws; anti-gambling activist groups will continue their efforts to prove that daily fantasy leagues do in fact constitute as illegal gambling. DraftKings and FanDuel need understand the motives behind each of these groups and understand their various activities in the marketplace. An easy way to track each of the different stakeholders is to create a separate group for each, then create triggers so that anytime one of the groups mentions the M&A, an alert is generated and it is immediately obvious what the motive is behind the trigger.
Engage the Influencers that Matter
Typically with contentious M&A communications, petitions are created to either halt or hinder the transaction. In the case of DraftKings and FanDuel, the two companies beat activists to the punch. Back when the legal issues around DFS first arose, the two companies started a petition to prevent a ban on online fantasy sports. While this wasn’t necessarily related to the merger as it was created over a year go, petitions are a common tactic used to get the issue in front of the right influencers.
The companies can probably expect petitions from activists that target the legality of DFS, as well as claims that the merger will create a monopoly. DraftKings and FanDuel need to be able to detect anytime a petition like this emerges, so they can put into action a plan that has been established ahead of time to quell the impact of any negative press.
The Journey Ahead for DraftKings and FanDuel
The deal is expected to be completed towards the second half of 2017. That said, the announcement of the merger is just the beginning of a longer journey for these two communications teams. A strong media intelligence platform can help ease the strain on the organizations by providing a centralized source of truth for a strategic communications plan.
The Zignal Enterprise platform helps M&A communications teams by combining all traditional and digital media into one centralized solution. The platform has the ability to highlight the key issues impacting the M&A transaction. trends. Finally, the solution also pinpoints the influencers that matter so that you are prepared anytime there is a mention of your brand.
For more information on M&A communications best practices, download our FREE webinar with the Brunswick Group.