Mergers and acquisitions can be a great way to grow a business, but they are also complex and risky. Internal and external communication is one of the most important aspects of a successful deal. In this blog post, we will discuss the importance of communication in M&A and how to build a strong M&A communication plan.
What is an M&A Communication Plan?
An M&A communication plan is critical to the success of any acquisition, and it ensures that all stakeholders know important facts about the impending transaction and understands the implications.
The M&A communication plan should be developed by the acquirer in collaboration with their internal and external communication teams. The plan should include critical information such as what to say, when to say it, and how to say it.
An M&A communication plan is not just about announcing the deal to employees, shareholders, and other interested parties. The plan is meant to help manage expectations and prepare for post-transaction integration.
When done correctly, an M&A communication plan can help smooth the transition for all parties involved and ensure the deal's success.
Who comprises an M&A Communication Team?
In larger organizations, there are always dedicated M&A communication teams, and they are in charge of communicating the changes to the customers and acquired employees.
However, this task goes to marketing and HR teams for smaller organizations. Since HR is more in contact with employees and more aware of corporate culture, communication functions can operate better with them. As for those in marketing, they will be in charge of external communications.
Why is M&A Communications critical?
In M&A situations, it's essential to have a solid communication plan in place. Changes are inevitable, some of which may be significant. And since change can be difficult for people to adjust to, it's essential to communicate these changes effectively.
M&A can be a very stressful time for employees on both sides. There will be a lot of position overlap, often resulting in dismissal. Employees will be worried about job security and whether or not they will be able to keep their position within the company. When they panic, they look for other jobs.
M&A communications are a key aspect of retaining key personnel and avoiding value loss. By communicating the M&A process and timeline to employees, they will be able to understand the rationale behind the decision and feel more secure in their position.
Additionally, an M&A communication plan can help engage employees during the integration process and make them feel like a part of the process. Employee cooperation is necessary for a smooth integration.
Only proper planning can help acquirers convey a powerful message that can create a positive M&A experience for everyone involved.
Once the transaction is complete, communicating with customers is equally important. They will also be concerned because they don't know the acquirer or maybe never wanted to do business with them in the first place. Losing customers will significantly hurt the transaction value post-close.
Well-planned M&A communications are necessary for customer retention, and customers must be kept in the loop to avoid disruptions in service or communication. Every acquirer should always prioritize the customer experience. A well-executed M&A communication plan will help to keep customers satisfied and loyal during and after the transaction.
When should communication planning start?
The sooner an M&A communication plan starts, the better. Ideally, communication planning begins right before signing, but it's best to start as soon as the company seeks to acquire a target.
The communication team should work closely with the deal team for consistent messaging. Varying messages will hurt the acquirer's credibility, which is paramount to success.
How to Build a Strong M&A Communication Plan
To get started, get a free copy of our ‘How to Create an Internal, Effective M&A Communication Plan’ eBook.
The best practices to building a successful mergers and acquisitions communication plan are as follows:
Templates are crucial to communication plans and will help save time and ensure consistent messaging, even on previous and future acquisitions.
Templates should include integration milestones. Employees must understand the incoming changes during integration. Also, communicate before and after milestones using different forms of communication. Not everyone uses similar tools for communication, so be prepared.
However, according to Briana Elkington, Sr. Manager, M&A Integration at Mindpath Health, do not change your templates because of one piece of negative feedback. Use data and consistent results before changing templates.
Also, having one person or team within the acquiring company responsible for coordinating all communications is better because messages will be more consistent. Too many inconsistencies can scare people away.
Structuring an efficient communication plan can be a tedious process. To ensure you have every critical step covered, grab a copy of our M&A communication plan checklist to facilitate key functions on the key messages involved in a deal process:
Focus on Employees
People don't like change, and that includes employees. Especially if employees don't know what will happen to them after the acquisition, they experience a lot of stress that, if unattended, may cause them to look for another job. Acquirers must understand that employees did not choose to be acquired or work for the company, which results in more stress and, in some ways, a loss of identity.
"If you don't have a happy workforce, you don't have a productive workforce, and therefore you don't have a profitable workforce. And that can really affect your deal outcomes." - Klint Kendrick
According to Dr. Klint Kendrick, HR and M&A Leader, acquirers must answer the three major questions that employees have during day one:
1. Do I still have a Job?
If there are layoffs, be honest about it. The worst thing is to lie about it and lose the trust of every employee in the company.
2. Are they going to be fair?
Policy changes usually follow acquisitions. Talk about it and tell them why the new policies make sense, are fair to the employees, and apply to everyone.
3. Will my job be as good?
With all the fear of uncertainty, employees need to know that their job will be as good as it was before the acquisition. Consider it as re-recruiting your employees and selling your company as to why they should stick around and experience their new job. Share the plans for the acquisition and show the people how they can be a part of that new vision.
Listen to the employees and make them feel they are a part of the new company. Encouraging feedback ensures that messages are heard and interpreted as intended.
Prepare for Negativity
There will always be employees who have a negative outlook about the whole transaction in any acquisition. The worst thing to do is ignore negative opinions or comments, which gives other employees something to worry about. Prepare for questions employees might ask before they even ask them. Recognize the validity of their concern and handle them promptly. Building trust with every employee is key.
“There’s always going to be a handful of acquired company employees who maintain a negative outlook on the changes you’re communicating to them, no matter how you communicate them.”
Because consistent messaging is crucial, everyone on the acquiring team must be aligned with the communication plan. Everyone must understand the image and message that the organization wants to convey to avoid any unwanted discrepancies, from the CEO down to the managers.
Use a Trustworthy Messenger
Unsurprisingly, employees often do not trust the acquiring company. The most effective messengers any acquirers can work with are the people in the target company. Founders are the best, but for large companies, middle managers will do. Using a trustworthy messenger will help get the messagse across.
"No one's going to listen to anyone from the company that's acquiring, as much as someone within their own company." - Briana Elkington
Way before the announcement, prepare the target company’s middle managers for the change process. Answer the three major questions the middle managers have and help them embrace the acquisition. Once you gain their trust, they are going to be the ones to settle the freaked-out employees on announcement day.
Focus on Customers
Realistically speaking, calling every customer before a deal closes is impossible. Reach out to the biggest customers and let them know ahead of time about the impending deal. The goal is to assure them that the company's new owner is still invested in providing the best quality product for them.
Just like with the employees, communicate the changes in the company's direction. If there are anything significant changes that will impact the customers, let them know in advance. Carefully explain why this has to happen so that they can make the necessary adjustments ahead of time.
Customers must feel valued during this transition, otherwise, they will walk out the door, and the target company will lose prominent clients.
Time your announcement
Timing can be very tricky in M&A communications. Even before the official announcement, rumors start to spread. If these rumors are unattended, they will cause panic, and employees will leave before acquirers even get a chance to convince them to stay.
However, internally announcing the deal early could be a problem because of insider trading concerns. The announcement has to be simultaneous to any public announcements, like a press release for larger organizations.
The best thing to do is execute the deal quickly. The longer the deal takes, the more risks involved. Get ahead of the rumor mill and announce before the employees validate the deal from someone else.
Tips for Day one
Stick to your notes
Do not wing the announcement, this could result in misinformation and inconsistent messaging.
Spend time in the office
During the announcement day, business leaders must stay in the office for an hour. They need to be available to answer any questions from the acquired employee. Being available to answer questions promotes trust and relationships.
Give out Swag
Give out swag on the announcement day to help the employees with their identity crisis. Buy some t-shirts, mouse pads, coffee mugs, or anything that will help employees align with their new identity as a member of the acquiring company.
Well-planned M&A communication is a critical part of deal success. Communicating effectively with employees and customers can help ensure a smooth transition and integration process. And lastly, empathy should be at the forefront of any communication plan to gain the stakeholders' trust.