Stirred but not shaken: The value of communications in M&A

Many announcements for an M&A transaction are limited to the financial and legal aspects of the deal, potential synergies, and some high-level justification. This is probably due to the sheer nature of a transaction, mainly involving bankers, lawyers, and strategic advisors in addressing management’s need to satisfy investors’ expectations. While these C-suite preoccupations belong to the hard-core components of any transaction, they leave little space for emotions and feelings.

Yet the intangible assets of an enterprise such as brand equity, employee engagement, customer loyalty or simply organisational reputation do have major value. Among other merits, they are, for example, reflected in the balance sheet as good will. These attributes come at risk when companies are merging or integrating and when management lacks clarity, or focus on priorities, leaving employees on their own to maintain trust from clients or suppliers.

A threefold approach in terms of communication will help address such situations. Early planning, long before the announcement of a transaction, allows time to establish a structure with a clear allocation of responsibilities for all parties involved throughout the process. Meticulously rolling out a structured communications cascade ensures relevant stakeholders are identified and addressed with appropriate key messages. Finally, a strategic focus on people allows for an integration that leverages the human power needed to engage with change.

1. Starting with the end

When dealing with mergers and acquisitions, the main preoccupation is not that people resist change – they don’t. The priority is to deal with forms of discomfort expressed by employees and customers that rooted in fear. When facing M&A news, the first question usually relates to the future of the current job. It is about losing revenue, planning stability and material comfort as much as it is about well-being and self-esteem. We hear people expressing realistic concerns about seating arrangements, coffee machines or flower pots. While management usually have had time to get accustomed with the planned change, others have not. This explains why most first reactions are naturally defensive.

Mapping the impacted stakeholders is a critical move to identify those individuals who are most likely to champion future change. Here we refer to employees, boards, investors, banks, unions, public authorities, trade associations or NGOs. The different clusters are then be categorised according to their legitimacy and power to influence corporate reputation. Customised communication action plans are developed for each stakeholder. In addition, issues potentially putting the integration at risk are identified, such as a pending social conflict in a factory or an ongoing reorganisation within one of the functional departments.

The deeper the information available, the better the deal narrative can be embedded in its broader context and the better the vision for the future shape of the business can be articulated over the coming 18 to 24 months.

2. Cascading the news

The announcement of a deal is a critical moment for all parties involved and it works best when following a strict protocol for rolling out, minute by minute, the information to the different internal and external audiences. The cascading messaging prioritises more sensitive and critical audiences to receive the news first and ensures none is missed out. Unless there are regulatory constraints such as a listing on the stock exchange or a mandatory information/ consultation procedure with employee representatives, employees on both sides should always be the prime recipients of news regarding a deal. Considering many enterprises celebrate their teams as their main assets, this is a way to show respect. At the same time, it highlights the importance of employees in making the transaction a success. The merger of cultures, the daily cooperation of sometimes historic enemies, and the focus on customer delight are within people’s hands and cannot be dealt with in a spreadsheet.

3. It’s the people

Now comes the moment to introduce the notion of tempo for the integration. While a new direction can easily be imposed top down, it is unlikely to succeed. Hence a rather counterintuitive focus on patience and giving time is needed. This is the time necessary for people to reflect on the implications, and integrate change before being able to adjust and realign. Obviously, the optimal speed for an integration requires continuous adjustment and active listening as most people can be won over with a healthy dialogue. You make the difference when people have the feeling that their concerns or contributions have found an ear and have been valued. The daily presence and visibility of leadership in the first weeks after an announcement provides the best interface to spread confidence and reduce organisational anxiety.

The absence of empathy and humanity is a primary reason that deals fail. In addressing the fear of losing, good deals are explicit about realistic benefits for those who will have to change most, and senior managers are best placed to inspire trust that those benefits will come.

Successful mergers and acquisitions ensure consistency between the strategic C-suite planning and the translating into a tangible vision, and explicit behaviour on the shop floor and the office. Communication offers the tool that allows for people not to be shaken but stirred during a deal, and feeds into the bottom line as it addresses organisational capital as the backbone for success. 

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