Following a dearth of activity over the past few years, cross-border deals between the Americas and Europe are back in vogue – and, based on the dollar value, there has been more cross-border mergers and acquisitions (M&A) volume than any time since 2001. According to research firm Dealogic, cross-border M&A more than doubled in value in the first half of 2005 compared with 2004. Global competition and other factors are forcing corporations to look internationally for growth opportunities that will strengthen their businesses and provide access to attractive markets.

Among major cross-Atlantic deals this year, BAE Systems announced the $4.2bn acquisition of United Defense Industries; United Technologies acquired Kidde PLC for $2.8bn; SAB Miller plc agreed to acquire Columbia’s Grupo Bavaria for $7.8bn, and Novartis has acquired Eon Labs for approximately $3bn. With this increase in activity in mind, there are some non-financial factors to consider when launching an international transaction. One key consideration is the huge difference between communicating a domestic transaction to your own local markets and announcing a transaction impacting employees, shareholders and customers thousands of miles away, who don’t know you, your business or your culture.

Of course, any transaction announcement can cause uncertainty, but the international elements of a cross-border deal can clearly add to the disruption. So a cross-border transaction requires careful planning, both to maximize the impact of the initial announcement (while minimizing distractions to the business), and to manage the effects of post-merger integration. While slick presentations and polished conference calls cannot save a bad deal, an inadequate communications strategy can kill or maim one that may otherwise make good strategic sense. In the past few years, many unsuccessful cross-border deals – as measured by post-announcement return to shareholders – have certainly failed because of bad decision-making, but many have suffered because the acquirers didn’t sell their story successfully to all of the necessary audiences.

Whether cross-border or domestic, there clearly are critical questions that must be answered by senior managements of acquirers and their targets. A strong M&A communications plan must signal that senior management understands fully what it is proposing and promising. So, what are the key issues that a company needs to think about to adequately prepare its communications strategy for cross-border M&A?

(1) Do you have a credible story with clear targets, that can be communicated, accomplished and monitored over time by the acquirer and investors?

(2) Does your story remove uncertainty and give direction to the organisation so that employees can effectively deliver? If not, how will you address the uncertainty?

(3) Does your story link post-merger integration plans to the economics of the transaction?

The aim of an initial announcement is to reinforce the rationale for a transaction to critical audiences, remove as much uncertainty as possible, and provide a road map to completion that addresses all audiences. For international transactions, there are some other issues to consider from the outset, such as the location of key audiences (employees, shareholders, regulators, politicians, investors/analysts).

Let’s say, for example, that a UK company is acquiring a US company, and the success of the deal hinges on the support of US shareholders and a commitment to US employees (as in regulated industries, for instance). This scenario would support making the announcement in the target’s market, as a way to demonstrate goodwill and assurances to employees from the outset. That may mean being in Little Rock rather than London. Using the same example, if an acquirer chooses to announce in the UK, the media there could set the tone of coverage before the US press is out of bed.

The risk here is that many of the US-specific messages won’t come across clearly to critical audiences in the US. The UK press may not even mention a company’s commitment to maintaining a large US presence, even though this might be a critical part of the story for US employees. There even is the potential that employees will read about the acquisition, or hear about it on the news, before the company informs them, which could start the day off with a confused or even hostile staff, especially if there are headcount implications.In the US, hedge funds are influential in mergers and acquisitions and are now becoming significant longer-term equity holders. It is common for this group to be publicly vocal if they oppose a deal and they can exert significant public pressure.

Maintaining an open dialogue with them is critical. They not only influence the outcome of a shareholder vote, they are also a source for Wall Street opinion. Customers are another audience that should be addressed on announcement day in order to prevent uncertainty that can turn into an opportunity for competitors. The important thing is that no audience is caught by surprise. It is also important to be aware of the considerable difference between the media environment in the UK and the US. In the UK there are many nationally read newspapers, while in the US, there are a relatively small number.

With only a handful of top-tier domestic newspapers, the competition for daily coverage is significant. Among broadcasters, CNBC remains by far the most influential business broadcast outlet. Regional and trade media play a more influential role in shaping coverage of US business stories. Media strategies must incorporate outreach to local correspondents in the US, keeping in mind that these journalists will look at a transaction primarily from a local-impact perspective. Other audiences to prepare for include regulators, politicians and union officials.

They can all play a significant role in determining the outcome of a cross-border transaction in the US. Transactions often provide a platform for local, state and federal authorities to further their own political agendas. You should prepare an effective approach to these audiences and listen to their concerns. These are just some of the key issues to consider prior to announcing a cross-border transaction. With proper preparation and consideration of all key stakeholders, a cross-border acquisition can lead to growth and strong performance. A well-conceived communications strategy is a vital element of the process.

Steven Lipin is Senior Partner in the US at Brunswick Group LLC. Previously, he was a reporter and editor overseeing M&A at “The Wall Street Journal”.