One of the largest and most rapid phases of M&As in tech sector history is taking place in Silicon Valley with new announcements every week. As this trend continues, PR's role rides the growing crest of importance as corporates and start-ups increasingly realize the crucial need for communications support.
Susan Butenhoff, president and CEO of Access Communications, is not surprised by this spree. She says the tech sector often leads economic growth and that acquisitions allow companies a cheap way to expand into other markets.
"If you're a company with money and want to multiply your growth potential, you will acquire other tech companies," she explains.
Opportunity for comms
With many companies looking to acquire start-ups, mainly in the mobile, cloud, digital, gaming, social, and e-commerce spaces, PR and communications is of major importance for early-stage companies looking to increase awareness of their brands, products, or technologies in order to subsequently increase valuation.
This gives agencies the opportunity to become strategic counselors and help these companies navigate the path to liquidity.
The timing of a communications plan is imperative and something many start-ups don't have a good handle on, according to Butenhoff. In her experience, most start-ups approach firms for communications help six months prior to a liquidity event, when in reality they should double that time frame in order to develop more strategic and effective communications plans that allow the company to build its narrative and add depth to their positioning before quiet-period restrictions kick in.
"The more educated the market," she says, "the more confident it is in you or the buyer."
Vijay Chattha, head of VSC Consulting, explains there is as much demand for PR on the other side of the acquisition equation, as established companies need strategic and effective plans for communicating with stockholders and the early-stage companies it desires to acquire.
"Big companies are realizing they need to position themselves through PR to make themselves a better exit for the start-up than going public," Chattha says.
LaurieAnne Lassek, VP of marcomms at geolocation service Quova, worked at the company before it was acquired by Neustar. She says it was vital to develop a strategic communications plan in order to find a company that was a good fit for an acquisition. This involved research, reinvigorating the brand's story to make it relevant again, and planning a strategic media tour that involved bringing the right stories to the right people to present Quova in the best possible light.
"We had to polish up some parts of the business that weren't as publicized," Lassek says. "And we had to look at 'what is the diamond in the rough here, what would investors be looking for.'"
Chattha reports a nearly 100% increase in new business inquiries in the start-up space in 2011 compared with the start of 2010, and believes the need for PR on both sides of the liquidity market is here to stay for some time.
Many companies are acquiring start-ups simply for the talent, so PR also proves to be a crucial tool in helping the acquiring company lure in a start-up.
"They're doing it to demonstrate that their corporate culture is cool," Chattha says.
Chattha feels that, of all areas, the mobile sector is set to be among the biggest focus areas of M&As in the future as large companies become interested in acquiring start-ups in order for them to be competitive when mobile is king.
"Many big companies want to position themselves as being ready for the mobile revolution, so they are buying start-ups," he adds.
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