The strategic role of communications during an M&A
It’s been a mega technology mergers and acquisitions (M&As) bingefest in the last month. Microsoft acquired LinkedIn for $26.2 billion. Last week, Yahoo sold to Verizon for $4.8 billion while Oracle acquired NetSuite for $9.3 billion. This week started with UberChina’s plans to merge with Didi Chuxing after years of fierce competition.
While 2016 seems to be the year for tech deals, it’s far from over, with venture capitalist Marc Andreesen last month commenting that many public companies are shopping to “fill in gaps in their portfolio,” and in contrast, many startups have had their valuations downgraded in the last year.
Against the flurry and excitement of an M&A, communications cannot take a backseat during the process. A recent study of 2,500 M&A deals found that a whopping 65 percent destroyed shareholder value - and you don’t need to delve too deeply into your memory to recall examples such as Yahoo/Tumblr, HP/Autonomy, and AOL/Time Warner. A solid communications strategy before, during and after the transaction not only conveys a strong, clear and consistent message to your stakeholders, but also alleviates any concerns, questions and uncertainty from employees, investors, partners, customers, media, analysts or other industry pundits.
While every M&A is different in size, scale and approach, there are a number of fundamental items to check off to ensure all communications runs smoothly. Here are five steps that businesses and communications pros should take.
1. Set up a communications task force
An M&A transaction is an obvious opportunity to bring together different executives from both organizations, and establish the best strategy for planning, positioning, conveying and evaluating all communications. Whether it’s focused on internal communications, external communications or a bit of both, every person on the task force should have an explicit role defining the strategy, adhering to his/her responsibilities, and being accountable for success measures set at the onset.
2. Develop your plan and messages
Preparation is key. Create a plan around the announcement that conveys information around the transaction, and consider the timing, format and method of the communications to address both internal and external stakeholders. It’s important to think about what messages you’ll want to convey. Are there any key phrases that should be incorporated to speak to the shared values, vision or future of the combined entities? What are the primary questions and concerns that could be raised that should be addressed in the talking points? How can communications manage any fear and uncertainty? There’s also the risk or rumors or leaks ahead of official announcements being ready, so make sure to be prepared for these possibilities.
3. Execute your announcements
Now that the legwork has been completed, it’s time to announce publicly the intent to complete the transaction. Besides a press release, blog post and other social media posts, what other communication platforms are appropriate to share the news and distribute information? As communications continues to become more social and digital, how can visual assets such as videos, educational modules and other channels help to further convey and engage your audience?
4. Monitor and respond
Sure, an M&A can be an exciting financial transaction, but not everyone may share the same sentiments. Announcing the deal is just the beginning - it’s then critical to monitor the types of stories and feedback that come through regarding the deal. All communications should address any concerns or issues identified during the planning stage. During this phase, there will be a variety of stakeholder questions being asked about the details and implications of the transaction - whether it’s around job security, current contracts, leadership, or future roadmap and direction. Monitor the sentiment and respond to the questions quickly - and if you are not sure of the right response, acknowledge this and clarify when this answer will be available. Transparent and proactive communications will go a long way towards a smooth transition.
5. Consolidate and integrate cultures
The first 100 days is particularly crucial during an M&A. For business leaders, continuing to discuss the value proposition of the deal and work towards consolidating the companies across every business department is vital, as it reflects the leadership and shows how the companies are moving towards their vision. According to PwC, there are five dimensions of cultural integration - leadership and management style, collaboration and teamwork, autonomy and involvement, adaptability, and work environment and employee experience. These “softer” areas of focus are just as important as the financial transaction - there are plenty of examples that show how companies have botched their acquisitions from failing to assess the cultural nuances.
There are many reasons why mergers and acquisitions may not be successful that are go beyond a watertight communications strategy. However, companies that have crafted a comprehensive, disciplined communications plan can effectively support a transaction and confidently convey the value of the deal in terms of customer focus, employee commitment and business growth. It’s an exciting time for communicators to work with their executives to build a lasting first impression and cultivate trust, value and success for the business.