RPT-BREAKINGVIEWS-M&A spin doctors boost supply of public credit

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By Jeffrey Goldfarb

NEW YORK, March 17 (Reuters Breakingviews) - As dealmakers turn to private sources of funding, some of their advisers are in the market for public credit. After toiling in the shadows of their financial and legal brethren, M&A spin doctors have started regularly putting their own names in lights. There may not be enough room for more egos in high finance.

First impressions matter in corporate acquisitions. So the initial press release, and subsequent advocacy on behalf of buyer and seller, can be important in shaping perceptions. Companies have long identified investment bankers and lawyers who helped orchestrate a transaction, on the theory that disclosing blue-chip advisers helps reassure shareholders and gives CEOs a bit of air cover. The rise of league tables during the 1980s enshrined such consiglieri on the documents.

Those providing "strategic communications" guidance long remained unidentified or are listed simply as media contacts. Their brands, however, are becoming an increasingly common feature of deal announcements. When workwear supplier Cintas unveiled its plan to buy rival Unifirst for $5.5 billion last week, for example, the companies gave their respective PR shops Joele Frank, Wilkinson Brimmer Katcher and FGS Global prominent billing, alongside bankers Morgan Stanley, Goldman Sachs and JPMorgan and attorneys at Davis Polk & Wardwell and Paul Hastings.

Frank's firm, one of the few remaining independent shops, seems to have catalyzed the trend, based on a crude review of recent announcements. In doing so, the doyenne of deal defense has sparked chatter among some rivals that the tactic might help attract investors or a buyer; others dismiss the idea of an implied for-sale sign.

If nothing else, the push for public recognition signals intensifying attention on PR firms' own niche rankings as they seek to convert one-off situational work into longer-term fees from public policy advice and more. Firms like FGS and Brunswick, backed by private equity shop KKR and banker Byron Trott's BDT Capital Partners, respectively, face extra pressure to extract value from corporate relationships.

In an era when artificial intelligence can draft a basic deal notice, there's a reasonable question about whether outside spokespeople warrant extra recognition. Then again, plenty of investment banks get league table credit despite doing little work. For bidding wars, hostile deals and other sticky situations, the messaging matters more. Hiring top-tier mouthpieces boosts an acquirer's shareholder returns by nearly $60 million on average when the takeover target is privately owned, researchers at Durham University and London Business School found in a study published last year.

Self-promotion should be easy enough for M&A messengers, but many business consultants sensibly leave the glory to their clients. In this case, there's also good reason to suspect that other vainglorious deal practitioners will prefer that spin doctors keep their credit private.

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CONTEXT NEWS

Workwear supplier Cintas said on March 11 it had agreed to buy rival UniFirst for $5.5 billion, including net debt, in cash and stock, more than four years after it first made a takeover offer.

(Editing by Peter Thal Larsen; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GOLDFARB/jeffrey.goldfarb@thomsonreuters.com))