Friday, February 5, 2010

M&As Expected to Increase in 2010

As the credit markets begin to ease, mergers and acquisitions will likely accelerate this year, according to PricewaterhouseCoopers (PwC), a leading global auditing firm.

M&A activity in 2010 will be driven by strategic buyers who have both the funding and the vision necessary to capitalize on acquisition targets that offer opportunities for revenue growth and enhanced productivity. The most attractive sectors for these “mergers of productivity” include:

• Consumer products
• Technology
• Energy
• Financial services
• Automotive
• Healthcare
• Entertainment and media

PwC sees financing as the key stumbling block impeding M&A activity next year, increasing the pressure on middle market deals.

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Tuesday, March 24, 2009

A Question to Bankers: What’s Up with Your PR?

I recently read an interesting article in Advertising Age about the marketing challenges facing financial services industry in the post-TARP world and how banks are responding.

Some customers are asking whether Citibank is a safe place for their savings,” writes reporter Beth Snyder Bulik. “So what is Citibank doing? Running ads in the Wall Street Journal about its microfinance capabilities in Texas and India.”

It’s just one example of the tone-deaf marketing messages coming from some banks that don’t answer worried customers’ real concerns … Is my money safe? Can I trust you? Will you be here tomorrow?

According to Ad Age, the top 10 banks and credit-card companies cut their ad budgets by a more than 25% in the fourth quarter of 2008 and nearly 40% December compared with those same periods in 2007. This represents a tremendous opportunity for banks and other financial services institutions to step into the void and claim it for their brand.

As our CEO, Ken Makovsky, wrote recently, public relations “is significantly less expensive than advertising and much more credible. We’re talking about a modest investment in time and money that delivers a major return on investment.”

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Monday, February 9, 2009

Bank of America Tweets Its Customers Well

Our New York City-based public relations firm is a strong advocate for using the new consumer-generated, or social, media to build connections, rapport and trust. In fact, our specialized Online Fluency practice, headed by EVP + Partner Robbin Goodman, is devoted entirely to the art and science of social networking with stakeholders. So I was intrigued to read an interesting piece on one of my favorite blogs, The Consumerist, about how Bank of America is using Twitter to resolve customers’ problems.

The bank has appointed an official BofA Twitter rep, David Knapp (screen name BofA_help) to “help, listen and learn from our customers.” Knapp handles inbound requests and scans Twitter for people talking about their problems with the financial services giant and reaches out to them.

One customer reported trying to contact Bank of America “a dozen different times and three different ways,” but one tweet to BofA_help put him in directly touch with executive customer service.

Another shared his story about how Bank of America helped fix his problem: “I got the fee I was disputing canceled, and they promised to send me a gift certificate. We'll see,” he said. “… if they keep up this level of customer service I might not switch banks when I move this spring.”

It’s early days yet, but the initial response to this social media experiment is very positive. The Consumerist reports: “If you're listening to the elevator music on the phone with Bank of America, why not shoot a tweet over to twitter.com/BofA_help? Maybe he'll solve your problem before you get off hold. It'll only cost you a few seconds and 140, or less, characters.”

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Thursday, January 22, 2009

A Global Crisis of Confidence in US Financial Markets

There’s a comprehensive and fascinating article in the January 3 issue of The New York Times that should be must-reading for all public relations (PR) and investor relations (IR) consultants who serve financial services companies, including private equity firms and commercial and investment banks. “The End of the Financial World as We Know It,” by Michael Lewis and David Einhorn, begins with a provocative statement: “Americans enter the New Year in a strange new role: financial lunatics. “

As proof of their thesis, authors cite “the strange story of Harry Markopolos,” a former investment officer who tried, for nine long years, starting in 1999, to explain to the SEC that Bernie Madoff, the man who engineered the biggest global Ponzi scheme ever, couldn’t be anything other than a fraud. In response, the SEC undertook a slapdash investigation of Madoff and pronounced him free of fraud.

The Madoff scandal is just one example of a systemic problem … and it’s not just a matter of insufficient oversight of the financial services industry.

According to Clusterstock, many of Madoff’s investors were well aware that his returns were impossibly good, so he had to be cheating. However, they never considered the possibility of a Ponzi scheme. They thought that the scam involved insider trading … and that’s precisely why they chose to invest with Madoff!

In many cases, the Wall Street swindler’s investors willfully chose to become complicit in their own defrauding by ignoring the old adage that “if it sounds too good to be true, it probably is. “

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Tuesday, December 16, 2008

Inventors: Leverage the Power of Specialized Thinking

Apparently, there’s never been a better time to be an inventor. According to Doug Hall, in his recent BWSmallBiz column, “Inventors, Pick Your Industry,” big companies are desperate for new ideas. Procter & Gamble, for instance, now gets more than half its ideas for new products from outside inventors. Five years ago, that number was closer to 20 percent.

Like our founder, Ken Makovsky, Hall believes that a specialized, sector-specific approach is the best. Here is his list of the top 10 industries that provide the “most fertile ground” for inventors:

1. Finance, credit, commercial banking and other financial services head the list, with gross margins topping 50%. (“Of course,” says Hall, “recent events show this may not be a good time to enter the financial-services industry.)
2. Landlords (47%)
3. Recording/movie industry (more than 40%)
4. Computer software publishing (40%)
5. Specialized manufacturing equipment (40%)
6. Bakeries and tortilla makers (31%)
7. The “sin” industries, such as breweries and gambling (30%)
8. Soft drinks (27%)
9. Publishing, both the online and old-line (27%)
10. Pharmaceutical and healthcare industries (25%)

Hall’s list was based on research undertaken by mathematician Greg Lemmon, who evaluated the profit margins in more than 200 industries. Those sectors with the highest margins, he reasoned, should offer the best opportunities for people who are interested in licensing an idea, innovation or invention in return for a royalty payment, which can be 25 percent of the gross profits.

Technorati Tags: inventor, businessweek, Doug Hall, Procter & Gamble, Ken Makovsky, Finance, Greg Lemmon,credit, financial services, Landlords, Computer software publishing, Soft drinks, Pharmaceutical, healthcare, business, communications, public relations

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Tuesday, November 4, 2008

Finally … Some Good PR in the Banking Sector

Talk about bad public relations! Only 21% of affluent consumers are confident in U.S. banks, according to a recent Gallup survey — the lowest level of consumer confidence in banks in three decades.

The growing financial crisis is taking its toll on everyone. According to a recent Wall Street Journal piece by Robin Sidel, 7.3 million American homeowners will default on their mortgages between 2008 and 2010, about triple the usual rate. Some 4.3 million of those will lose their homes.

The essence of good crisis management is doing the right thing and doing it quickly. Chase did precisely that when it announced its aggressive plan to modify the terms of $70 billion in mortgages for as many as 400,000 borrowers who are — or may soon be — behind on their payments, by moving them into loans with lower interest rates, smaller principal amounts or other more-affordable terms.

Said Charlie Scharf, CEO of Retail Financial Services at Chase: “It doesn't make sense for us to wait [to address the problem]. … We've heard loud and clear and are listening to what some of the thought leaders around the country are saying.”

John Taylor, chief executive of the National Community Reinvestment Coalition, called Chase’s announcement “a gutsy move.” We couldn’t agree more. Not only is Chase doing the right thing, it’s demonstrating and increasing the pressure on other lenders to help take some part of the burden off distressed borrowers. It’s a terrific example of proactive public relations and crisis management.

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Wednesday, April 30, 2008

A Word to the Wise

“Mind the gap,” warns a recent article in the Financial Times earlier this month. FT columnist John Plender offers substantial evidence that “income inequality in the U.S. is at its highest since that most doom-laden of years: 1929.” And, I would add, it doesn’t bode well for the image and reputation of retail and investment banks and hedge fund and private equity firms.

Here are just two of the gasp-inducing indicators Plender cites, which were the result of an analysis of Congressional Budget Office figures by Jared Bernstein of the Economic Policy Institute:

• Between 1979 and 2005, the pre-tax income for the poorest households grew by 1.3% annually and middle incomes grew by less than 1%, while the income of households in the top one percent grew by 200% pre-tax and — even more shockingly — by 228% post-tax.

• The result of this lopsided distribution of income growth was that, by 2005, the average after-tax income for the bottom fifth of households was $15,300; for the middle fifth $50,200; and for the top 1%, just over $1 million.

The subprime mortgage crisis and the collapse of the American housing market has left negative equity in its wake … also anger about a system that gives banking executives huge bonuses when the economy is booming, while taxpayers pick up the bill when banks fail.

This is certainly a public relations challenge, but it’s not just a PR challenge. It’s a fundamental operational issue that also needs to be addressed by the entire financial services industry — including banks, investment banking, hedge fund management and private equity firms and their professional associations — to avoid regulatory backlash … or worse.

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Thursday, April 24, 2008

Environmental Claims Meet with Consumer Doubts

It seems that everybody these days is leaping on the “green” (or clean technology) bandwagon. I’ve seen press releases and ads taking the moral — i.e., green — high ground from companies in virtually every industry, from financial services and professional services to pharmaceutical and technology.

It’s no surprise to find that the blogosphere is exploding with talk about environmental issues. According to Nielsen Online, sustainability buzz more than doubled between September 2006, when blogger messages on the topic totaled 83,000, and December 2007, when they had skyrocketed to 172,000.

Unfortunately, one of the most popular blog topics is corporate hypocrisy — also known as “greenwashing” — where companies misrepresent their commitment to sustainability with aggressive PR campaigns. Greenwashing was the topic in 25% of all sustainability discussions on the web in 2007, according to Nielsen.

Confirming consumer skepticism, a recent web survey by Burst Media, an online media and technology company, found that while 70% of respondents recalled seeing green ads at least occasionally, more than 20% said they never believe the claims. Two-thirds say they only believe the claims sometimes.

Before you risk overstating your company’s use of clean technology, check out the Federal Trade Commission’s Guides for the Use of Environmental Marketing Claims. Issued by the FTC in cooperation with the U.S. Environmental Protection Agency (EPA), they can help ensure that your company’s green claims don't run afoul of the law.

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