The Role of Public Relations Advisors in Acquisitions

Bidders that employ top-tier public relations (PR) advisors in acquisitions experience announcement returns 0.63% higher than other bidders. The effect is concentrated in acquisitions of non-public targets, where information is limited, with returns 1.11% higher. It is larger for smaller bidders and bidders with less analyst following. Propensity score matching and IV regressions support a causal interpretation. Following these acquisitions, customer retention, supplier payment terms, and employee satisfaction improve. Top-PR-assisted deals receive greater media coverage with more positive sentiment. Our findings suggest that PR advisors enhance deal quality by improving stakeholder communication, increasing the likelihood that merger benefits are realized.