M&A communication: what do you need to know to be effective?

m&a

M&A integration, and the internal and change communication that are essential to its success, is an enduring topic that communication leaders need to pay continuous attention to.

Having been involved in merger communication since the late ’90s, I’ve developed a number of insights and ideas about how communication professionals can best support effective M&A transactions.

Here are some questions and insights.

How are communications in mergers and acquisitions different to standard internal communications or change communication?

M&A essentially involves a minimum of 3 organizations (parties) simultaneously. The first two are the current acquirer and the acquiree, who both have their individual internal communication challenges, and the third is the vision of the future integrated organization.

The relationship between those three depends on the nature of the transaction; whether it’s an acquisition, a true merger, or a reverse takeover. The key difference in M&A internal communication is that you need to know which of those 3 organizations you’re dealing with at any given point in time.

Some acquirers will want to race to a superficial ‘integration’ too quickly, where the communications are integrated before the organization. This makes the look and feel of the transaction outpace the operational reality, and creates a gap that can be problematic internally and externally. Being able to balance these 3 parties effectively requires a great deal of strategic and political skill, both from a consulting perspective and an internal dynamics perspective.

Internal Communications are in a unique mediating position between C-Suite/Upper Level Management and the regular employee, and they need to be facilitate broad interaction between them. How does Internal Communications approach this?

There’s a lot of potential for conflict here between the C-Suite and employees. Most Merger & Acquisition situations are created because there’s room for efficiencies.

While the organization is thinking ambitiously and strategically, in the background the discussion is actually about ‘What’s going to happen to my job after this?’. The challenge there is being able to enroll employees in that more ambitious vision, into the logic of the transaction, and into the integration of the two different companies as being the best answer for the most employees.

If you’re not addressing job insecurity, that can feed into more insecurity. ‘We’re going to have a fantastic future, and you may or may not be part of it’ is not a good message. Beyond communications, it’s important to go in with a robust set of principles about how values will be considered and how employment decisions and will be taken.

How should you address job insecurity?

For the most part, you can’t address it immediately because you simply don’t know where the synergies are going to be. You may have inclinations based on the original goals of the integration and the extent people are part of that. The key thing is figuring out why the transaction is taking place, and having people principles that are better than standard. Don’t just do the legal minimum, it can have a massive negative impact.

Do you believe that there’s too much of a focus on the financial/strategic elements of a transaction and not enough of a focus on the people/culture elements?

The issue isn’t whether there’s enough of a focus on people and culture, it starts with the level of thought. There’s a lot of thought on maximizing the financial value of assets, but the reality is a lot of those assets are connected with people, values, culture and processes.

The asset itself is not always driving the value, and how to unlock this value isn’t always considered – most M&A’s just start with a desire to do so. This is where a lot of transactions go wrong. You buy a brand, and treat it as a logo, but you then get rid of what the logo has come to mean. Suddenly, that asset has lost all its value. You need to look at what you’re buying and who you’re buying, and not let the drive for efficiency kill the asset you’re acquiring.

When some employees hear the word ‘acquisition’, they immediately start packing up their desks. How can you anticipate these issues and prevent your top talent from leaving?

Top and mid-talent issues happen on both sides of the acquisition. Even people who would be interested in applying to one of these companies might stay away if they see impending M&A activity.

You need to be clear about what the ambitions are generally and what the processes are specifically, so that people can have some faith in the process and actively participate instead of leaving at the first opportunity.

How effective do you believe smaller team-building activities are to the success of an acquisition? Is it worth going into the forest and building a raft?

Variable. If your goal is to genuinely integrate as opposed to simply having a ‘business as usual’ arrangement, you first want to do an Organizational Network Analysis (ONA). ONA is essentially a form of organizational due diligence that identifies social patterns in at least one, but ideally in both of the companies involved.

ONA can surface the 3% of employees who drive 90% of conversations. If you can do that, you can get a much smaller group of people who can drive the integration on the basis of knowledge and connection, before you invite everybody to a resort to play paddle tennis.

Team Building can be useful, but trying to team-build tens of thousands of people can be superficial unless you do an ONA and find the people driving the organization on each side. This has become even more crucial in the wake of the dispersion of professional staff caused by the pandemic.

Will people be open to the possibility of integrating and forming these connections if you haven’t already communicated to them about job security? Can you communicate about these in tandem or does one come first?

You can’t communicate about job security first. You can’t know who’s staying and who’s leaving until you’ve done your ONA or your role mapping exercise and know about the value people bring. Even though most people will want to know what their status will be, they also know that the best way they can protect their status is to participate as well as they can, provided they have a meaningful way to do so and that the process isn’t disingenuous.

If people sense that the decision has already been made and they’re still being asked to participate as if it hadn’t, that can become a real problem. But if they see that it’s an ongoing process, they will participate more in that process.

Do you need to guarantee communication even if you can’t guarantee content, or is no news good news?

No, you need to be very clear about what your communication principles are. If you say ‘we will publish a regular communication on this specific day and it will be there’, it has to be there. Regular communication is an indicator of the seriousness of management.

Which is more important – the facts, or trying to be as empathetic as possible?

The facts should come first. You need to be cognizant of how people feel and not inflict additional pain onto that process.

In one merger I worked on, any bad news came from the acquiree and any good news came from the acquirer. That wasn’t accidental. The problem when you have corporate empathy is that it can come off more corporate instead of empathy. And there’s no value in injecting something like that into messages, it can make people not want to participate anymore.

When anything that can go wrong is going wrong, people are leaving, not buying into the vision, how should you approach that?

Eyes on the prize.

What do you want to achieve with this transaction and is that something people can genuinely align with and embrace?

Once you have an honest discussion about that, you rebuild the communications. This is where we’re going, this is why, this is how we’re going to treat people and this is what you get out of this.

It looks like remote work is going to be around for a while. How will this affect the future of internal communications in M&A?

Team integration is going to be an issue. How do you get people from Company A to be effective in Company B, not just doing the basics, but also understanding the processes and the people, and how they’re different from what they are used to in Company A? People need to be introduced to each other, there’s a human integration and a practical integration. You need to deal with this as being a distinct process.

What is the biggest difference between internal and external in an M&A context?

Employees on both sides are internal and external communications channels, despite any caution you may give them.

If you’re at a backyard barbecue and ask what’s happening at Company A, the employee will tell you, and it could spread, potentially to a competitor. You have to treat employees as an external communication channel. You also want to have a powerful, consistent and coherent story shared formally and officially through your channels, and have a distinct look and feel, providing it is ideologically consistent.

What is the worst possible mistake you could make?

Overselling the acquirer.

Talking about how great and nice they are in the absence of any tangible policies, principles and intentions. If you create an inconsistency about the acquirer, you will have an extremely difficult problem on your hands.

What are your tips for success?

Really getting to know the organization.

Qualitative interviews, getting a sense of what people would like the new organization to be, being prepared to listen and being seen as a company that listens.

Being generous towards people who are departing.

You do those things, and you will have a very different atmosphere than when you are trying to make a conquest out of it. Do your ONA, and figure out who not to fire. If you fire one of the 3% that drives 90%, you’ve said goodbye to a big chunk of the value of that merger.

What would be your message to help people understand the value of Internal Communications in M&A situations?

Penny-pinching on internal communications could be the biggest waste of money in the acquisition.

Putting somebody who’s used to doing regular internal communications in charge of an M&A internal comms scenario is like taking somebody from a game of checkers into 3-dimensional chess, because there are a lot of different interactions.

The social dynamic is completely different in an M&A scenario.

Is it better to be honest or to be optimistic?

You can be both. Where you have to be cautious is that one person’s positive can be another person’s negative. If you’re doubling the size of a regional HQ in Amsterdam, that’s great for Amsterdam. It’s not great for someone at the other regional HQ in Paris, because they might assume that Paris doesn’t have much of a future. How you handle this really starts with nailing the people principles. Reduce the ambiguity, give people reassurance, tell them how decisions will be made and treat them well.

With thanks to Tara Sabic.

An earlier version of this article was published on LinkedIn

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Mike Klein

Mike Klein is Principal of Changing The Terms, a consultancy focused on internal, change and social communication. Mike has worked with organizations in the US and Europe for more than 20 years on pressing strategic communication challenges, and is a prolific writer and commentator on communication strategy topics. Mike is also the Founder of #WeLeadComms, an initiative to drive open recognition and in the communication profession. He holds an MBA from London Business School, and is a former US political consultant.

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