General economic conditions are improving, there are growing signs that the reins on credit availability are loosening, investor and buyer sentiment is trending in a positive direction, and companies are starting to feel the pressure to accelerate growth.
Ladies and gentlemen, the urge to merge is returning.
I worked for a global private equity firm for eight years and led marketing and communications on 45 transactions during that time. I fully understand the adage, “It’s easier to buy, rather than build.” Mergers and acquisitions can be game changers. Companies with healthy balance sheets acquire businesses that add operational bandwidth, expertise, blue-chip customers, and valuable competitive advantage. It can be a beautiful thing.
As companies plan for a transaction, the focus centers on financials, legal requirements, operational issues, and integration. But there’s one other business element that should not be overlooked: communications—in announcing the transaction, in managing the transition, and in building the business longer-term.
A merger or acquisition brings significant change. It can be an uncertain time, and when that uncertainty is not addressed proactively:
- Productivity declines. Employees become anxious and distracted and spend hours at work speculating about their futures.
- Employees depart. It begins with “the stars,” the organization’s best employees. They start looking for new opportunities. They can no longer see a clear direction and career path with the company.
- Customers defect. They are no longer confident in the company’s ability to meet their needs, and competitors are knocking on their doors, anxious to capitalize on the organization’s perceived vulnerability.
Communication is the great stabilizer in a merger or acquisition.
It prevents erosion within the business. It eliminates uncertainty, improves productivity, provides clarity and understanding, and mobilizes support.
The goal is to proactively engage key stakeholders – the audiences that affect the success of your business internally and externally. Communicate with them early and often, providing information that addresses their concerns and is consistent and strategically aligned. Communications should articulate the reasons behind the deal, showcase the business value, reveal timing for key actions, and be candid about what is known and what is unknown.
M&A communications begins with a strategic communications plan and requires flawless execution. This is not the time to “wing it.” Develop a thought-though strategy that details stakeholders and messaging, carefully choreographs tactical execution of the announcement, and sets a roadmap for sustained communications about the transaction, from announcement through post-close transition.
2 Comments
Bill, I could not agree more. I was the US People and Organization Integration Leader for the merger of two major global life sciences companies. What made this merger successful was a clear focus on people. We were able to retain key talent, hit sales goals, and retain customers because of this. The Integration team worked fast and smart. The rest of the organization focused on their jobs. Manager communication was absolutely crucial. People trust their immediate boss more than others. So organized ‘trickly down’ communications were imperative. Companies also need to define the 3-5 key decisions that need to be made immediately – and make them. People cannot tolerate ambiguity for very long.
Also, experts in people and organization effectiveness, generally HR professionals, need to be involved in due diligence. What looks like a good deal financially may have challenges the finance people can’t see. Mergers fail because of people and organization culture. Leaders always realize when it’s too late.
Joanne,
Great feedback and insight. It looks like our past experiences very much align. You make a good point regarding the need to involve “experts in people and organizational effectiveness” during due diligence. When communications, HR and operations experts are side by side with the deal team, it allows us to understand the environment, identify issues, and respond, proactively, with a plan — a plan that can be instrumental to the efficiency of the transition and to the longer term success of the transaction. Thanks for your comment.