“Mergers and acquisitions (M&A) are intended to create value for the merging organisations through, for example, increased financial strength, expanded market presence, new capabilities and improved efficiencies. Yet the majority of M&A transactions fail to produce the required results.” Discuss.
I was recently invited to deliver the communications support for an imminent merger …. or acquisition …. or perhaps it would be something else entirely. Initially I was a bit hesitant to jump in as M&A support has always seemed to be a fairly specialist activity, as much external comms as internal, and I wasn’t sure I had the requisite experience. However, I gave it some thought, mapped out my approach highlighting what I anticipated would be the key areas of concern / activity and reached out across my LinkedIn network to find people with more actual experience who I could use to validate (or otherwise) my proposals.
(I hadn’t used LinkedIn in this way before as the people I approached via InMail had M&A comms as a specialism and were 2 or 3 links removed from my core network. Their responsiveness, generosity and willingness to share their expertise were remarkable and humbling and I hope one day to be able to repay the debt.)
What it did prove was that 20 years of communications experience plus the resources of the internet made me a capable comms partner for an M&A project.
I knew from my research that “…more M&A deals fail because of unresolved cultural issues than because of transaction fundamentals…” (source towerswatson.com) and good communication is critical to ensure that multiple stakeholder groups will remain focused, confident and loyal. Despite these well known facts, communications expertise on the project team often appears to be an afterthought. The resulting communication plan struggles to deliver more than the carefully orchestrated, centralised outflow and falls woefully short of the true engagement programme that will enable the desired transformation.
The project I got involved in was, in the end, neither a merger nor an acquisition but turned out to be “…something else entirely…”. It was also a good illustration of why M&A project teams so often delay involving communications as, over a period of 4 weeks, the end game switched between any one of three or four different scenarios, several times each week. Due to the threat of legal action we were not actually able to communicate the decision until after the go-live date. Thanks to the dual facts that….:
1. the company had a history of acquisitions that had been well managed…
2. plus this latest development meant that they would be recruiting in Europe while many of their
competitors were contracting,
…. their employees were predisposed to be more accepting than they might otherwise have been.
I saw the recruitment story as a key plank in the communication strategy both internally (new career paths and development opportunities) and externally and we produced an eye catching promotional leaflet for use at tradeshows and conferences that highlighted the company’s new capability and advertised the range of new roles opening up across Europe. We showcased potential career paths with quotes from existing employees. It was the experience of one of them that revealed how successful acquisitions are achieved by recognising and leveraging the strengths of their counterparts, not by imposing inferior processes on the acquired party:
“…One of the great things about [this company] is that it has the confidence to adapt its own business model to leverage some of the opportunities offered through its acquisitions.”
Venturis – a strategic communications consultancy that specialises in M&A support – bases their approach around four phases of M&A communications:
- The planning process during the Pre-Close Phase which “…begins with identifying the change agenda and the future end-state vision for the combined organisation…”
- Day One Announcement Phase which set the tone for the new organisation and “…should be planned out hour-by-hour and tightly choreographed.”
- First 100-Day Transition Phase – typically a period of rapid change when effective change management is essential to “…reduce the risks of diminished productivity, employee morale issues and customer dissatisfaction or exodus.”
- Integration Phase where the focus is to “…unify the organisations and move the company towards a common vision.”
In my view, success in the integration phase depends on how well you have encouraged and enabled employees across the ‘new’ organisation to take ownership of the vision and start working together to make the vision a reality. There have never been so many tools and channels that enable collaboration across all types of boundaries, but it requires commitment and leadership to give the integration phase direction and purpose.