The Best Ways to Communicate an M&A | Hilton Smythe

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The Best Ways to Communicate an M&A

Poor communication at any stage of an M&A could result in shareholder revolts, customer dissatisfaction and problems with post-deal integration. So, here’s what you need to know about M&A communication.

M&A deals have surged during COVID-19 as companies took advantage of volatile markets and shifting landscapes.

Even though UK M&A activity in 2022 cooled from its record high, the UK remains a hotbed of activity due to rising interest rates, surging inflation and its business-friendly ecosystem. Amidst these opportunities however, comes the need to get your communication strategy right.

Poor communication at any stage could result in shareholder revolts, customer dissatisfaction and problems with post-deal integration. With that in mind, here’s what you need to know about M&A communication.

What is an M&A communication plan?

Every business undergoing a merger or acquisition must have a firm M&A communication plan. All stakeholders, including investors, employees and customers, should know the facts about the transaction, its implications and its benefits.

In some cases, this may even be a legal requirement. According to the UK Takeover Code, public M&A transactions must include an accurate intention statement of the party’s intention when it is made. Following the deal’s conclusion, the party must announce whether it has satisfied its original intention statement.

Regardless of your legal obligations, an M&A communication plan is beneficial for every type of business, large and small. Your plan should be developed in collaboration with internal and external communication teams.

Remember, this is not merely about announcing a deal but managing expectations and preparing for future integration.

How do you announce an M&A?

In deals between private limited companies, the announcement is often an afterthought, and this can lead to disruption once the news comes through.

You want to control the narrative to ensure the waters aren’t muddied and everyone knows what the deal means to them. When making an announcement, you should assume that the news will spread like wildfire.

According to Chief Strategy Officer of SocialChorus, Nicole Alvino, “Lack of communication leaves employees unmotivated and confused. Even if the company is not yet in a position to talk specifically about how changes would impact individual employees, saying nothing at all is a mistake.”

For this reason, most owners will announce their deals in the following order:

  • Employees
  • Customers
  • Suppliers
  • The public

How you announce is up to you, but it should involve collaboration between every level of your organisation, with managers responsible for communicating messages further down the chain.

Does communication in Mergers and Acquisitions matter?

Communication is a pillar of any successful M&A deal. According to Microsoft, UK SMEs see a massive disconnect between leaders and employees, ultimately impacting everybody.

This has a real knock-on effect. For example, the HP-Compaq merger in 2001 suffered severe challenges in alignment due to a lack of clear communication, making it difficult to integrate corporate cultures and generating internal resistance.

Some of the benefits of effective communication include:

  • Reducing uncertainty
  • Retaining top talent
  • Enhancing employee morale
  • Reducing stakeholder resistance
  • Smoothing the transition
  • Minimising operational disruption

How to internally announce mergers and acquisitions

We’ve established that the initial step should be communicating a deal internally before announcing it to the public.

Although your communication method may be a unique aspect of your workplace culture, transparency is always the key to success. Any formal communication should follow a strict format.

Make the announcement

Begin by making the announcement. Leave no room for confusion by getting to the point immediately. It should clarify the significant issues, such as potential job losses and any rumours you have been aware of.

The announcement should also include a rough timeline and details on both companies.

Explain the reasoning

Move onto the “why” aspect of the deal. What are you looking to achieve with this deal? It could be more customer reach, increasing market share, or diversifying your operations.

Whatever the reason, share it with your employees and explain how this will benefit them.

Address questions

Naturally, your employees will have questions. Regardless of the company, these questions usually revolve around job security and whether their roles will change.

Even if the answer may be uncomfortable, being upfront and transparent with your team is vital.

Also, don’t be afraid to offer reassurance. If their jobs are guaranteed, and their benefits will remain the same, emphasise that. Be open and transparent.

Direct questions to HR

Finally, ensure that everybody knows that lines of communication remain open. Note that any employee can contact HR or their department leader with any other questions or concerns they would like clarification on.

You may also want to schedule a meeting to address the deal in person. Provide precise details on the when and where so that they can prepare anything they would like to ask.

Ultimately, your internal announcement tells stakeholders they are valued and will be heard.

How to create an effective M&A communication plan

Launching an effective M&A communication plan begins with a framework for its development. If you’re feeling at a loss for handling this part, you’re not alone.

Here’s a step-by-step guide to best practices for developing a communication plan that aligns with how you do business.

Step one – Choose a template

Templates are critical to communication plans. They save you considerable time, guarantee consistent messaging, and can be tweaked to suit specific companies.

Any good template must include integration milestones, which can serve as the action plan you share with stakeholders.

You must stick to a single template from day one and avoid changing how you communicate because this can confuse and disorientate during what is a worrying time for many.

Step two – Adopt an employee-first stance

Nobody likes change, and that includes your team. If employees don’t know what will happen to them, it will allow stress to grow and a rumour mill to develop in the heart of your organisation.

Fail to get a grip on it via communication, and your employees could down tools or begin looking for another job.

All communication plans should answer these key questions:

  • Do I still have a job?
  • Are new policies going to be fair?
  • Will my job still be as good?

Step three – Factor in negativity

Regardless of the M&A deal, some employees will still be pessimistic about what it will mean for them. The same goes for all other stakeholders.

The worst thing you can do is to dismiss their negative comments. Instead, your plan should anticipate negative feedback and provide a roadmap for combatting it.

Ideally, you should maintain clear lines of communication, and negative feedback should be adopted as quickly as possible. It’s all about building and reinforcing trust with the people who work for you.

Step four – Lock in alignment

Consistent messaging is crucial, but you have little hope of achieving this if you don’t have alignment throughout your team.

Everyone must be on the same page regarding the message and image you wish to project. In other words, there must be zero deviation from the managing director to low-level managers.

Your communication plan will outline how and when you will discuss the upcoming M&A.

Step five – Appoint a trustworthy spokesperson

Unsurprisingly, employees often don’t trust top-level management, especially the acquiring company’s management.

The most effective messengers to speak to your people are those higher up on the food chain. In other words, it should be you, but middle managers can also work in a larger company.

However, before you begin, the target company’s middle managers should also be prepared for what you say. Again, everyone from both sides must be on the same page. Close collaboration is essential during the run-up to a completed deal.

Step six – Don’t forget your customers

Calling every customer before closing a deal is impossible, so you may think sending an email blast to everyone on your newsletter list is the answer, and you would be right. However, your biggest customers should receive a personal call from you explaining what’s going on and what it will mean for them.

Again, expect to address negative queries and concerns like you would with your employees.

Step seven – Get the timing right

Timing is the tricky part because rumours often spread before the official announcement. If you let these rumours fester, you’re going to cause panic, and your top talent may leave before you even have a chance to explain everything.

Likewise, announcing the deal early can lead to accusations of insider trading. In the case of publicly listed companies, the announcement may have to be simultaneous with your public announcement; but deals between private companies provide more flexibility.

The best thing you can do is to complete the deal quickly following due diligence: the more hold-ups, the more risk.

As you can see, managing the communication side of an M&A deal is complicated. With that in mind, consulting an experienced team can help you work out the unique challenges within your business. If you need support handling M&A communication, speak to Hilton Smythe today.

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