Top 10 tips for communicating effectively during M&A
By Linley Watson
Good communication is a critical component in any change initiative, especially during a merger or acquisition. When bringing people from different teams or organisations together, much of the fear, uncertainty and the resulting resistance to change can be reduced through honest, balanced communication. A program that is linked to the strategic intent of the integration and that informs, sets expectations, addresses concerns, focuses on the future, and engages people throughout the transition period and beyond is a necessity.
Good communication requires a strategic approach and a dedicated and experienced resource. It is not just an add-on to marketing, or to the CEO/CFO/HR manager’s day job. If dealt with improperly, what starts as a communication problem eventually morphs into poor morale, loss of talent, a decline in productivity and a drop in profitability. And with social media, the consequences can become a public relations nightmare, literally within minutes.
Good communication is proactive and keeps things moving forward. It needs to be clear, candid, compelling, consistent, and constant. Staff need to hear the same message, numerous times, in various ways until it sticks.
Addressing the rational and emotional responses to a merger or acquisition is an investment in time, effort and money that has a significant payback. Here are my top10 tips for communicating effectively throughout each phase of the M&A deal:
1. Align Expectations
Leaders and organisations can have vastly different expectations and habits around communication. This is an important cultural factor that should be explored in the diligence phase. Misalignment in communication style and practices has the potential to undermine even the best of intentions as in this example where the merging companies were at opposite ends of the communication spectrum:
The acquirer had a charismatic CEO who was an inspiring communicator and they had a small executive team who called all the shots. The Exec told their direct reports what they needed to know and then those managers were expected to share the key messages with their teams. There was a small marketing team but no official internal communications resource. Formal communication was sparse and ad hoc but deemed adequate.
In contrast, the acquired organisation had an internal communications team of six, transparency and open communication were core values. They utilised a wide range of communication vehicles to keep everyone up to date including a process of cascading team briefings. This extensive communications program was a source of pride for the selling company but seen as unnecessary ‘spoon-feeding’ by the buyer. It was quickly dropped, leaving a massive communications vacuum for the newly acquired organisation whose leaders now had no idea what, when or how to communicate what was happening.
Each organisation thought their way was the right way and although they tried to come up with a ‘happy medium’ it did not work. Communication remained a significant issue throughout the integration and it took its toll on the people, the culture and business performance.
2. Plan and prepare for each phase
Rather than an ad hoc approach, the most important thing is to have a well-thought-out plan that determines the strategic communication objectives for each phase of the deal – pre-announcement, announcement, integration, and business as usual.
As well as staff on both sides, bear in mind customers, suppliers, alliance partners, and potentially the wider community and the media. Determine the most effective way of delivering the messages and the logistics for doing so. Often timing slips, so keep the plan updated, have a holding statement, and be prepared for unplanned or unwelcome situations such as a leak to the media, when a considered but quick response may be warranted.
Effective communication takes time to prepare, deliver and digest. Pushing out rushed or ill-conceived communications can destroy credibility and trust and can incite suspicion and resistance.
3. Take everyone on the journey
Depending on the type of deal, a change in ownership can come as a complete shock for most. It can be easy for those in the inner circle to forget that they have been immersed in the deal for months and have gotten used to the idea. Almost everyone else is hearing the news for the first time and they need time to process and internalise it.
Traditionally, the time spent communicating and getting people on board becomes incrementally less as you move down to the ‘lower’ layers of the company structure. However, it is often the mid and frontline levels that are the most impacted and where resistance takes hold. Don’t fall into the ‘tell them once and they’ll change’ trap. It takes many repetitions before the message eventually gets through.
4. Talk why, before how and what
In the absence of a compelling way forward, people will stay locked in the past. The onus is on the CEO and executive team to communicate in a way that engages and excites people about the future.
At the outset, people want to know why the deal has been done. They know M&As happen for business reasons, so paint a compelling vision of the future and communicate the benefits to customers and to them, not just to the shareholders. Staff might not like the change but if they perceive that it has a purpose beyond making more money there is likely to be less resentment.
As well as ‘the why’, people want to know how things are changing, and when, from both a big-picture and day-to-day perspective. Most of all they want to know what it means for them and what is expected of them.
5. Tell it like it is
It can be tempting for acquiring leaders to attempt to soften the blow with statements that are ambiguous or that they can’t deliver on. Comments such as, “It will be business as usual,” “We don’t anticipate making any changes,” and “We’ll take the best of both worlds” are all common platitudes. Referring to the transaction as a merger, when that is clearly not the intention, is a big mistake that ultimately makes things harder. People usually view a ‘merger’ as the coming together of equals and therefore expect to have equal say when it comes to integration decisions. They will fight for their way of doing things, resist change and when they eventually realise that the balance of power is rarely in their favour, it can cause undue friction and a feeling of betrayal.
6. Make it a two-way process
Remember that communication is not just about pushing messages out. It is equally important to listen. Listening helps people feel valued through the emotional journey of change and it also provides valuable insights for leaders, who can be remote from the everyday interactions and challenges experienced. And monitoring and actioning feedback can ward off trouble before it blows up into a major issue.
During the early stages of integration, especially if in shock, people may not really comprehend the important information that is being shared. What they do remember is the answer given to a question that is of concern to them. Much is revealed by the questions that are asked, and Q&A sessions are a fantastic listening opportunity. Within the legal boundaries, even if the news is bad or you do not know the answer, being honest and upfront is always the best policy.
7. Harness the informal network
In every organisation, there is an informal network that tends to fill the void when communication is lacking. As people try to make sense of the situation, if information is sparse, the rumour-mill runs wild, scepticism and lack of trust sets in and gossip can become a divisive undercurrent. Get to know who the key influencers are in the informal network. Work with them to understand what is really going on and what people’s concerns are. Engage those who have good intentions for the organisation as ambassadors.
8. Prioritise the ME issues
No matter what their role, everyone is concerned with “what is going to happen to me?”. People are not going to worry about the company’s survival until they are assured of their own, so ‘me issues’ must be addressed and communicated respectfully, as a priority. Even if there is bad news people want to know, and they are watching to see how restructures and redundancies are handled. Treat people well and acceptance eventuates, treat them poorly and the emotional culture of the organisation can plummet to levels that make recovery almost impossible.
9. Build trust by being trustworthy
Essentially, communication is about building trust. Trust is the foundation for any successful relationship, and it is crucial for creating a cohesive organisational culture. Trust operates at a neurological level. It can take years to develop and only moments to destroy, which is why a well-thought-out and well-executed communications strategy is so vital during times of major change.
When there is a lack of trust, innocent words and actions can be twisted into something sinister. Unchecked, this can quickly escalate, so it is important to keep an ear to the ground and quickly stomp on gossip, rumours and untruths before things get toxic. Trust can be built through listening empathetically, communicating effectively and by acting with integrity.
10. Partner with M&A communications experts
Even if you have an internal team experienced in change communications, consider partnering with external M&A experts to help plan and craft messages, align expectations and to help capture the essence of the united culture, drawing people together in a fresh way.
It might not be easy but communicating effectively with arguably the most valuable asset in the deal – your people - is the key to a successful corporate marriage.
Listen to the M&A Stories podcast "USE THE POWER OF COMMUNICATION FOR A SUCCESSFUL M&A MARRIAGE" where Toby Tester and Robert Heaton interview Linley Watson on the top 10 tips for communicating effectively during M&A.
Linley Watson is CEO of Peak Performance International, a Melbourne-based people and culture consultancy. She is an authority on M&A culture integration and the author of “Avoiding The M&A Failure Club (What The Numbers Don’t Reveal)”, which discusses why people and culture can make or break your M&A deal. Contact Linley if you would like a copy of her book.
For more information on M&A culture integration contact Linley on T: 0403149220 E: linley@peakperformance.com.au www.peakperformance.com.au