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Mergers, acquisitions, divestitures – these are some of the most challenging communications scenarios corporate teams face. Moreover, they are intense change-management exercises since they introduce risk, uncertainty and at times, even brand ambiguity.
Sometimes – and ideally – corporate communications is at the table as a deal takes shape. But often, and for good reason, these events are hatched by top management, supported by a small team of internal strategists, outside advisors and the board, then sprung on corporate communications teams when the deal is largely baked, the letter of intent nearly signed and the communications imminent.
Like a chef on Hell’s Kitchen or an episode of Chopped, you need to take a surprise basket of ingredients – the rationale of the deal and its various dimensions/implications – and convert it into a well-choreographed, multi-course communications dinner that’s palatable to a range of constituents: employees, customers, shareholders, vendor partners, civic leaders, regulators, to name a few. If you’ve read this far, you’ve probably sliced and diced your way through a few deals, or are about to put on your apron. In today’s market environment, rife with consolidation and change, transaction communication is less of a matter of “if” than “when.”
Successful deal communications hinges on a lot of factors, but here are some key ones:
You really only get one chance to get it right – Perceptions of a transaction among most of your key constituents are cemented with the initial announcement. Even if a transaction won’t close for several months, it’s considered “virtually closed” in the minds of those affected soon after that first announcement. If your organization is publicly traded, the market and the media renders a verdict almost immediately. Your key messages, response to questions/objections/criticisms, ability to satisfy the WIIFM (what’s in it for me) needs of affected constituents, tactical approach to communications, all need to be exceptionally well considered and mapped out. Then, you need to reinforce all of this up to and well beyond deal closing.
To the acquirer goes the communications – Know your purview and what to expect from the other party. While they don’t always take it, the acquirer typically has the right to control the overall approach and messaging in deal communications. As a seller, you might want to have a lot influence over the communications that go to your employees directly affected by the sale. You might want to take every opportunity to explain why you’re doing the deal and why it makes sense. You might even have a communications plan already built. But expect the acquirer to have a heavy hand, or take over the communications completely. They are taking on the execution risk after the deal closes and it’s their right to make sure communications helps manage that risk. If you are the acquirer, that risk is yours and the reverse applies.
Most employees don’t speak “deal” – Transactions, especially those in the publicly traded sphere, tend to get framed in the context of the strategic rationale, price multiples, leverage ratios, obtainable synergies, and other arcane “dealspeak.” These measures mean everything to equity and credit analysts, investment bankers and shareholders. They mean much less to those constituents who power your business every day and who are operationally affected – employees, customers, partners. Your transaction may indeed be a market coup and a masterpiece of finance engineering, but lead with simple explanations of the transaction benefits for these critical audiences and limit the deal speak.
Deals are emotional – It takes time for the logic of a transaction to sink in, because it has to get past the emotion. Employees, customers, partners will focus on the WIIFM (what’s in it for me) and will take a wait and see attitude on the logic of the deal. Being frank, acknowledging that transactions often create many more immediate questions than answers, giving these audiences a feedback channel and committing to regular updates can help them move through the emotion that surfaces with impending change.
Deals are personal – The bigger the change for your constituents, the more they need to hear from you face-to-face. Never send an email memo to do the job of a video conference, small group meeting, town hall or personal phone call.
They need to hear it from their boss and peers – Top-down communication is unavoidable in a deal. But employees will turn to their peers, their boss, the grapevine, business media coverage and maybe social media to test the messages they are hearing from the top. If they hear from their supervisor and peers the same thing they heard from the CEO, that reinforcement helps drive acceptance and engagement. Supervisors need to be prepared and coached to be advocates of the transaction. Moreover, they need to quickly identify and correct misinformation and false perceptions.