Written by Joris Vanthienen
Summary: M&A transactions have a very high failure rate. Mainly due to the failure to integrate the two parties involved. To achieve success, it's important to drop the P in Post-Merger Integration and consider integration as a holistic process. Ideally starting when formulating the strategic rationale of a transaction. We’ve seen that top performers prioritize merger integration projects and follow BrightWolves’ six principles for successful integration. Today, we’ll dive into the fifth principle: communication
Communication: You are communicating enough when you think it’s too much
Communication is a critical component of any change initiative. People do not resist change as such, but rather uncertainty. The way you communicate with people can make a significant difference in how well they receive and accept the change.
This is especially true in merger integration. M&A communication is inherently challenging due to the complex nature of mergers and acquisitions, involving multiple stakeholders, sensitive information, and the need to manage expectations, maintain confidentiality, and navigate potential resistance or uncertainties during the integration process.
People do not resist change as such, but rather uncertainty
Shape the narrative: Build a “Merger Brand story”
Mergers and takeovers can be a complex undertaking. They encompass individuals and emotions. Despite the difficulties posed by legal paperwork, financial matters, and operational concerns, these challenges are overshadowed by the task of unifying diverse groups into a cohesive entity with a fresh culture, identity, and narrative.
Therefore, a compelling narrative is crucial during a merger as it provides a unifying story that helps stakeholders understand the purpose and potential of the combined entity. It enables organizations to communicate a clear vision, aligning diverse cultures, and motivating employees towards a common goal. A well-crafted “why” not only facilitates stakeholder buy-in but also instils confidence later on in investors, customers, and partners, fostering a positive perception of the merger and enhancing the chances of long-term success. Achieving success in this endeavor demonstrates remarkable mastery in crafting a compelling brand story. Thus, it is prudent to place your trust in communication professionals even in pre deal phase.
No improvisation: Prepare a holding statement with Q&A
A holding statement is a crucial tool used to address potential stakeholders' inquiries and concerns during the initial stages of the deal. It should be structured in a clear and concise manner to provide relevant information while managing expectations. Here's a suggested structure for a holding statement in an M&A process:
Opening paragraph: Begin the holding statement with a brief introduction, acknowledging the M&A process and its significance. Express your commitment to transparent communication and addressing stakeholders' concerns.
Confirmation of the deal: Clearly state that a merger or acquisition is underway or has been agreed upon. Provide the names of the involved parties and emphasize the strategic rationale behind the transaction (the M&A brand story).
Key benefits and objectives: Highlight the potential benefits and objectives of the merger or acquisition.
Impact on stakeholders: Acknowledge that stakeholders, including employees, customers, suppliers, and shareholders, may have questions and concerns. Reassure them that their interests are being considered, and outline your commitment to minimizing disruption and ensuring a smooth transition.
Communication channels: Specify the official channels through which stakeholders can obtain accurate and up-to-date information. Provide contact details for a dedicated M&A communication team or point of contact. Encourage stakeholders to reach out with their questions or concerns.
Timeline and next steps: Briefly outline the anticipated timeline for the M&A process, including key milestones and integration phases. Highlight that more detailed information will be provided as the process progresses and share the organization's commitment to keeping stakeholders informed.
Closing remarks: End the holding statement with a positive and forward-looking message. Express gratitude for stakeholders' continued support and reiterate the organization's commitment to transparency, effective communication, and successful integration.
Closing remarks: End the holding statement with a positive and forward-looking message. Express gratitude for stakeholders' continued support and reiterate the organization's commitment to transparency, effective communication, and successful integration
Define your stakeholders according to their interest and power to influence
To ensure that your communication is as effective as possible, it's important to map out your stakeholders and their level of involvement (vs. their level of power) in the change. This can help you prioritize who to communicate with and what information they need.
High level of interest – High power to influence: Stakeholders here will typically be your Executive Committees or main investors. Actively engage them in the process. They are either part of the transformation office, or are actively consulted.
High level of interest – Low power to influence: This is a big bucket. Stakeholders would typically be the employees of the company up to middle management, externally typically your customers. The golden rule here is, up completion of the transaction (or the moment it is out there): keep them informed. Effectively communicating the M&A process and timeline to employees is crucial in retaining valuable personnel and mitigating any loss in value. Seamless integration relies on the cooperation of employees. On the same hand, well-thought-out M&A communications play a critical role in customer retention, ensuring that customers remain informed to prevent any disruptions in service or communication. Prioritizing the customer experience is paramount for any acquirer.
Low level of interest – low power of influence: This can be in example certain suppliers/vendors or employees in another business unit or country not affected by the merger, the golden rule here is to passively monitor.
Tailor your message, but always be honest and address the ‘me’ issues quickly
It is crucial to tailor your message to the audience as much as possible. This means customizing and adapting the content, style, and delivery of a message to effectively resonate with a specific group or individual. This involves understanding the characteristics, needs, interests, and preferences of the target audience.
In general, honesty and transparency are key components of effective communication during a change initiative. Even if the news is not always good, it's better to be upfront and honest than to hide information or mislead people.
Finally, it is important to adress “me” issues quickly:
Will I keep/lose my job?
What will be my reporting lines?
Will this affect my (potential) pay
Where will I have to work from?
Who will be my colleagues?
…
Adress the 'me' issues quickly
Don’t forget the best communication & change management tool: visible and active sponsorship
Even if you’re equipped with a good merger narrative, a well thought of holding statement, a prepared Q&A list and a clear stakeholder communication & engagement strategy: Don’t think this guarantees communication success.
There is one thing that is often forgotten and not given enough attention. I call this “the most important channel”: the senior manager’s communication. The best change management tool is senior managers’ face time with middle management and employees. By having leadership lead and communicate by example, you can ensure that the change is embraced and supported by everyone in the organization. The shadow of the leader is larger than you think…
Thank you for reading and looking forward to presenting the next and last article of our series on ‘Control & Measure’.
See you next week!
Need help setting up your M&A for success? BrightWolves offers consulting services along the full M&A spectrum: ranging from helping to define your M&A strategy, to target screening & selection, commercial due diligence, deal closing and post-merger integration. Do not hesitate to reach out to our expert, Joris Vanthienen