Friday, June 20, 2008

Don’t forget communications during M&A process

IPO seasons may come and go, but there is one thing that never goes out of fashion: Strategic merger and acquisition activity.  While big deals — like Microsoft Corp.’s attempt at Yahoo Inc. — dominate coverage, there are thousands of M&A deals each year.

For the corporate communications team, M&A deals present the most confidential assignment and the most important assignment, too, because an M&A deal is a great opportunity to reposition the company.  

From a communications perspective, friendly deals have three phases: Pre-deal planning, the announcement, and post-integration. The communications team must create the plan and documentation within a tight time frame, without a lot of information because details change during negotiations.

Here are some tips to handle communications during each phase:

Define the deal before defining the plan. The communications team needs to understand the goals of the deal itself, including what is being acquired and the overarching strategy. Communicating the strategy effectively can help you sell the deal, whether to shareholders or to the marketplace. 

Define the announcement to set realistic goals. The deal may be good news for the two companies, both sets of customers and the community, but that doesn’t mean the announcement will get significant media attention. Set realistic goals for the announcement based on factors such as deal size and interest in the sector. Keep in mind: The goals for the two companies may be very different, particularly if what is being acquired is only a division. In any case, the communications teams from both organizations have to get together and finalize consistent messages. 

Develop the announcement content, but keep it simple. There can be a tendency to create too much content, which then has to be approved by the decision-makers at the two companies. For one assignment I was involved with, the client wanted a lot of documentation, and we had a checklist of more than a dozen documents. In the end, the media was interested in only the press release, the company timeline, and the new logo. The other external documents were never used. On the other hand, a key-messages document and an internal FAQ document are always essential. The other essential document is a central timeline for updating both companies’ websites and intranets, alerting employees and customers, media, financial and industry analysts, and industry pundits.

Continue communications during the post-integration phase. Too often, post-integration communication gets ignored while the organization’s focus shifts to the next thing. But the post-integration phase of communicating with employees and customers can be vital to the success of the deal. The communications team needs to support the merger to help implement organizational change, integrate two different cultures, and ensure good employee morale. Ideally, the communications function must work closely with the human resources and information technology groups during post-integration to define the culture and eliminate uncertainty. 

Focus on employees during post-integration. Employees are on the frontline of change, and their questions range from those about benefits plans to how to answer phones and  how to work with a new set of products and services. Employees need a lot of information to do their jobs. Left unanswered, their questions can lead to rumors that the deal isn’t going well. Therefore, communications should identify and enlist cultural ambassadors among employees, and to regularly update employees on progress as well as obstacles to the integration. 

Small and midsize businesses don’t have a lot of room for error, and should ensure they get communications right from pre-deal planning all the way through integration.

 

Norman Birnbach is president of Birnbach Communications, a Marblehead-based public relations agency.