Communication Matters - our blog on trends and events


Posts by Patrick Gallagher

Merger objection lawsuits getting tougher for plaintiffs’ attorneys

The easy money business of merger and acquisition lawsuits may be getting more difficult for the plaintiffs’ law firms that specialize in these questionable class actions, according to new data from Cornerstone Research* and some recent legal decisions.

In the nearly three years since the Delaware Court of Chancery first signaled its hostility to the proliferation of so-called disclosure-only merger lawsuits (culminating in the landmark In re Trulia, Inc. Stockholder Litigation decision), the sector has undergone considerable turmoil. (See my previous blog post.)

In 2015, the first year impacted by the Delaware court’s change of heart, the percentage of M&A deals valued at more than $100 million that attracted shareholder lawsuits dropped to 84 percent from the…

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3 employee communications lessons learned from the Starbucks fiasco

Starbucks Corp. is not finding it easy to put the cap back on the can of worms opened by the April incident in Philadelphia where a store manager called the police to remove two young black men who had asked to use the restroom without purchasing anything while waiting for a friend, and then refused to leave when asked to do so.

The company responded quickly and appropriately. The CEO flew to Philadelphia and personally apologized to the two men, and the company announced a day of racial bias training for all U.S. store employees. But coming up with a workable new policy while under the hot glare of the media has been challenging.

Executive Chairman Howard Schultz’s impromptu May 11 disclosure that people will now be allowed to use Starbucks’ cafes, including its…

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Talking about tax reform during earnings season

Most public companies remained circumspect at best in their comments about the federal tax reform legislation as it took shape last summer and fall and even as the Tax Cuts and Jobs Act was signed into law.

Now, though, with the quarterly earnings season underway, virtually every company is saying something about tax reform – the impact on its corporate tax rate, earnings, cash flow, customers and markets, and more. And it probably won’t be the last time they address the subject. What lessons can companies take away from how early reporters have addressed federal tax reform?

While a handful of companies have limited their discussion to the bare bones, the majority appear to be taking a deeper dive. As the Wall Street Journal wrote, “Some of the biggest U.S.…

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The uphill battle to take down the ‘merger tax’

Merger objection class-action lawsuits have been the bane of public companies for going on a decade. Each year from 2009 through 2015, somewhere between 84 percent and 94 percent of all merger transactions over $100 million were challenged by at least one shareholder class-action lawsuit. In the January/February 2018 issue of the National Investor Relations Institute (NIRI) magazine IR Update, I write about the efforts of jurists and activists to clamp down on meritless merger suits and the maneuvers of opportunistic plaintiffs’ law firms to keep the six-figure fees flowing.

Read the full IR Update article here.

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Five reasons why tax reform still looks like a shaky bet

Six weeks ago I wrote here that investors and corporations should not count on Congress passing tax reform legislation this year. Now that the GOP’s “Big Six” has released a somewhat more detailed framework, do the chances look any better? Here are five reasons why the ambitious plan is still a long shot:

  1. Too Many Democrats. People like to say that no one knows what the Democratic Party stands for. One thing it definitely stands against is big tax cuts for the rich. In August, all but three of the 48 Senate Democrats signed a letter rejecting deficit-financed tax cuts for corporations and the wealthy. The leading message from the Big Six is that the tax plan would provide no benefit for the rich.  But pretty much everyone else acknowledges that the nation’s…
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