Communications might not be a deal-breaker, but it is an important part of keeping the acquired company's value. A poor communication plan can result in an exodus of employees, customers, or even suppliers. Sharing his experience on managing communication workstreams is Jeff Hennig, Sr. Director, Corporate Development at Xilinx.
"Having a dedicated comms person gives you one single source of truth that you can continue to use going forward for all these deals. And it just helps make your life a lot easier." - Jeff Hennig
If your company is not acquisitive, then you can probably get away with a part-time resource. However, if you are highly acquisitive or planning to be, a dedicated communication person would be beneficial. It would make your life easier if you have an entirely built-out communication process, who has an owner that knows what to do, when to do it, and who to talk to.
According to Jeff, planning communication needs to start early. During a deal, communications can take a back seat for more critical items such as diligence problems, agreements, or legal contract issues that are going on simultaneously. This is why it's good to have expectations and alignment early.
When it comes to announcing the deal, there are many underlying reasons whether to do it or not. If you are buying a public company, then you have to be transparent about it. You need to complete communication deliverables, such as press releases, 8-k filings, and sell-side researchers in wall street, to employees of both companies.
Private deals, on the other hand, can be more flexible. It could depend on the rationale of the deal and the scale of the business you are acquiring. If the target company has no employees or customers, then you can definitely choose not to announce. If they do have customers or employees, then you definitely need to consider them if you want to have a good relationship on a go-forward basis.
At Xilinx, they like to set up a communication steering committee. It's usually composed of corporate communication, corporate marketing, executive sponsor of the transaction, corporate development, and then a legal representative.
The committee's purpose is to review all the communication deliverables that are going out when you announce the deal. It's going to be a massive document so it would be better to involve them slowly throughout the process and have them review some of the deliverables in advance. Dropping a pile of documents a day before the deal closes is not a good idea. Ensure you're getting meaningful input from them because once it goes public, you can never take it back.
Building your communication strategy certainly has a lot of considerations. You have to consider the deal type, the deal size, how it fits into your strategy, etc. All of these can alter how you build your communication strategy.
Also, it's essential to consider how you will communicate with your people and the message you want to say. Alignment with the seller on how to communicate with their employees is crucial. They could be promising job retention to their employees while you plan to cut people for cost synergies.
"When it comes down to communicating anything publicly, you have to get approval from the target as well, and make sure that they're comfortable with it." - Jeff Hennig
Timing is also another factor. Some deals might get delayed, and the rumor mill might start to spin. You don't want employees finding out that they are getting bought from the rumor mill. This causes panic and might result in key people leaving the target company before the deal even closes.
Furthermore, it's important not to surprise Wall Street. They could have their assumptions on your strategy that could potentially impact your stock value. How you communicate with them and how you present your transaction with them is definitely an area you want to consider when building your communication strategy.