Deal or No Deal?

Global mergers and acquisitions activity suffered its weakest first quarter in a decade as an abrupt banking crisis, stubborn inflation and continued interest rate hikes worsened stock prices and drove fears of a recession, depressing dealmaking. The value of mergers and acquisitions dropped 45% to $550.5 billion between January and March compared to the same period last year, the largest decline in the first quarter since 2001. 

In contrast, activist shareholders remain busy, launching a total of 135 campaigns in Q1, the highest first quarter total since 2019. So far, only 18 of those have escalated to a proxy fight, but with many annual meetings fast approaching, we expect several more to evolve into shareholder contests.

These trends in the capital markets were top of mind last month at the Tulane Corporate Law Institute, the annual gathering of leading lawyers, bankers, proxy solicitors and communications advisors focused on M&A and shareholder activism, including several from FGS. Among the highlights:

  • Foreshowing the brutal quarterly dealmaking data, JPMorgan Chase’s Global Head of M&A Anu Aiyengar declared “There’s a brick wall in front of M&A activity.”
  • Scott Barshay, Chair of the Corporate Department at Paul, Weiss, Rifkind, Wharton & Garrison, said the current regulatory regime led by Jonathan Kanter at the DOJ and Lina Khan at the FTC was having a major impact on the deal landscape and predicted the M&A market would start to rebound only at the end of 2023.
  • Sullivan & Cromwell’s Audra Cohen argued companies’ efforts to alter their bylaws amidst activist attacks often left them in complicated litigation, distracting executives and advisors from more effective activist defense tactics.
  • Interestingly, the SEC’s Associate Director of Corporation Finance, Ted Yu, told the panel the emergence of the universal proxy card has thus far not reduced the costs of running an activist campaign, despite predictions to the contrary by governance experts.

Twitter Blues

Many prominent Twitter users and tastemakers are no longer verified on the platform as of April 20—and they seem to share a widespread sentiment that they do not intend to subscribe to Twitter Blue to keep the check mark.

This move is significant and has the potential to influence Twitter’s efficacy and impact as a platform. 

Among those users who lost their verification status, we are seeing somewhat of an “anti-influencer” reaction — individuals who are outspoken and almost proud of this change. We are also seeing several brands react in different ways:

  • Some organizations have adopted the new verified approach (i.e. The Washington Post, The White House, MTV, etc.) and signed on as official organizations. It is unclear if they are paying for their status at this time.
  • Some organizations have decided to leave the platform entirely or pause their official use of the platform (i.e. NPR, CBC, etc.) due to concerns about brand verification.
  • Some organizations and individuals have also reported receiving verification checkmarks without applying or any additional context. In response, some users in that group have tweeted publicly that they have not applied or paid in response.

So far, there is no legitimate widespread prediction of a mass exodus from the platform. But these next few weeks will be crucial. Brands and organizations should remain mindful as the removal of verified check marks may lead to increased misinformation, identity confusion, viral communications crises and/or public harm.

Find our tips for navigating these and other Twitter changes here.

Walking The China-EU Tightrope

As a result of China’s stance on Russia’s invasion of Ukraine, European distrust of China is on the rise. With complex economic ties at play, the EU is pursuing a delicate balancing act to prevent further deterioration of relations. 

For the first time since the outbreak of the Covid pandemic, European Commission President Ursula von der Leyen joined French President Emmanuel Macron on a visit to China earlier this month, where they aimed to use China’s influence over Russia to bring it to the negotiating table. 

However, these two leaders have different approaches to European relations with China. Von der Leyen recently called on Europe to reduce perceived dependencies on China’s economy. Her goal is to see Europe “de-risk” its economic relationship by tightening scrutiny of investment flows and trade in sensitive technologies with China while abstaining from outright restrictions on trade and investment. 

Macron, however, wants to leverage EU-Chinese relations as a mitigating, de-escalatory force. A large delegation of French business representatives accompanied Macron to China, in the hopes that economic ties will help stabilize the relationship and even incentivize China to modify its stance on the war in Ukraine. His subsequent comments that Europe should distance itself from tensions between the U.S. and China over Taiwan, and pursue more strategic autonomy, ignited criticism across the EU and overshadowed the visit itself.

As these diverse and even conflicting goals shape European rulemaking, companies will need policy and organizational resilience. Within the framework of the EU’s balancing act, changes in policy and in rhetoric will be numerous, and businesses need to hedge their operations against potential risks. It is crucial that company leadership have the capacity to understand current geopolitical developments, and adapt their strategy and business models accordingly.

Affirmative Reaction

The U.S. Supreme Court is widely expected to ban or further roll back affirmative action at the end of its term in June, a decision that could prohibit any consideration of race in college admissions. The outcome could have effects well beyond campuses, as many employers use hiring practices in the workplace similar to college admissions – considering race as part of the goal of creating a more diverse culture.

In anticipation of the ruling, FGS Global developed guidance outlining how to assess the landscape ahead of the June decision and craft communications in preparation for the result.

Some key takeaways include:

  • Create a working group – Include representatives from communications, legal, HR and key stakeholder groups and, ideally, diverse voices representing potentially impacted communities.
  • Be thoughtful about your tone – Critics are attuned to corporate jargon, and stakeholders recognize when you’re just following the crowd.
  • Put actions behind your content – Speak from your established value, but communicating allyship without meaningful action will be criticized as performative.
  • Consider the right spokesperson – If you’re going to publicly comment, think carefully about who the best voice is to communicate your updates.
  • Listen closely, and be ready – While the ruling will reverberate over the long-run, expect to be asked questions the moment the decision arrives.

If you are interested in receiving the full memo, contact

Quid Pro Crow?

The Supreme Court has faced mounting ethical questions and loss of public faith in recent months—but don’t expect Washington to do anything about it. 

Media investigations have revealed anti-abortion activists had a secret campaign to influence justices and that Justice Clarence Thomas has for years accepted luxury trips and failed to report the sale of property to a wealthy Republican donor. 

Yet the Supreme Court is not bound by the same guidelines as the executive or legislative branches or even other parts of the judiciary, which just last month revised its regulations to clarify stays at commercial properties and travel by private jet must be reported. A complaint signed by Citizens for Responsibility and Ethics in Washington (CREW) and former chief White House ethics lawyers Norm Eisen and Richard Painter alleges Thomas’ real estate deal violates the Ethics in Government Act of 1978, but there are no indications he will face any repercussions.  

It seems unlikely the Supreme Court will cede oversight to another body. With a divided Congress, proposed bills to require justices to adopt a code of ethics are unlikely to pass. And a majority in the House and a supermajority of the Senate are unlikely to coalesce around articles of impeachment for an individual justice, something that has not happened since 1805. As the New York Times editorial board suggested last week, the problem of influence peddling – or at least the perception of such – seems to be an intractable issue with a long and bipartisan history.

Abortion Contortions

The fight over mifepristone, one of two pills typically used in combination to terminate a pregnancy, has reached a fever pitch with a Texas District Judge’s suspension of FDA approval of abortion medication mifepristone. 

The Justice Department moved quickly to appeal the Texas decision last week, requesting an emergency stay. On Wednesday, the Fifth Circuit Court of Appeals ruled to allow partial access to mifepristone while the case is being appealed while also introducing limitations on how the drug can be dispensed, including prohibiting mail delivery and restricting the use of the pill to the first seven weeks of pregnancy. 

In response, the DOJ on Friday asked the Supreme Court to preserve full access to the drug and pause court-ordered restrictions that are set to take effect. The administration suggested the court could alternatively grant review and hear arguments on an expedited basis. Danco Laboratories LLC, the drug’s primary maker, filed a similar request with the court earlier in the day. 

In response to both filings, Justice Samuel Alito, who wrote the court’s 2022 decision overturning Roe, temporarily froze District Judge Kacsmaryk’s ruling Friday afternoon, preserving access to mifepristone for five days to allow the Supreme Court time to review the administration and Danco’s emergency appeals.

On Thursday, District Judge Tom Rice in Washington state doubled down on his ruling asserting mifepristone must remain available in 17 states and the District of Columbia. In the most recent ruling, he found the FDA cannot roll back access to the abortion pill in 18 jurisdictions, regardless of conflicting orders issued in other federal courts, and said that the Biden administration “must” follow his order. 

With the future of mifepristone far from certain, Vice President Kamala Harris convened a meeting of the Task Force on Reproductive Health Access on Wednesday to strongly condemn the federal appeals court ruling and announced several new initiatives to support abortion access.

Stay Ahead of Crisis

Recent events in the banking industry, among others, highlight the importance of effective crisis management and the need to stay a step ahead of complex and fast-breaking issues, particularly as it relates to reputation and legal considerations.

Members of our Crisis Communications and Issues Management practice recently co-authored a chapter on “Public Relations and Message Management” for the Fourth Edition of Cleary Gottlieb’s Global Crisis Management Handbook

The chapter discusses how to handle public relations aspects of crises, including how to weigh the practical benefits and legal risks of any public response and factors to consider when crafting and delivering your message.

Some key takeaways include:

  • In addition to reputation, you need to consider the legal—and practical—consequences of any public response.
  • The decision to proactively disclose an issue is critical—do you have a duty, and, if not, is it the right move strategically to frame the message and support the legal strategy?
  • In crafting a disclosure, close collaboration between PR and legal can help maximize its effectiveness while avoiding language that may generate future risk.
  • Most often, a crisis response won’t require just a one-time statement but rather a sustained communications strategy.
  • When working with outside counsel and public relations firms, take steps to maintain privilege, to the extent possible.