Multinational organizations around the globe frequently look to growth through acquisition or merger as one of the most effective ways to achieve strategic goals. In fact, with the depressed U.S. dollar, there is an increase in the number of multinational organizations making acquisitions within the U.S. There are many reasons why organizations often seek a change of ownership, structure and operational processes in times of adversity.
Some M&A situations can be mutually beneficial, while others benefit the interests of one party over the others. Some M&As are cordial and others hostile. But irrespective of the reasons driving M&A activity, the end game envisions an improvement or positive goal of some significance. Accomplishing these goals ultimately depends on the people who will be asked to not only support the new vision and strategy but also to implement changes in process and, in many cases, witness the accompanying downsizing that may result. Regardless, M&A activity always means significant change.
Change begins at the organizational level with reorientation around a new mission, strategy or structure—or all three. A change in any one or all three will certainly necessitate changes in the behaviors of individuals at all levels in the organization. When setting the expectations and guidelines for behavior change communication must take into consideration both the existing culture and how that culture communicates—both internally and externally.
The change load (the degree to which people will be required to carry out their work differently) in M&As can be rather minimal. When the acquisition is intended only to expand the holdings of the acquiring organization, and there is no attempt to change the general operation of the acquired organization, the transaction is all but invisible to the employees and general public.
At the other end of the acquisition spectrum is a complete takeover. The impact on the workforce is significant in this case, as it may be for customers and the general market.
M&A process overview
The goal of most M&As is to pass through the three phases—pre-deal, doing the deal and post-deal—as efficiently as possible, and to arrive at a stage where the objectives of the deal have been realized or are within range. M&A goals can only be reached through people, and people are reached by formal and informal communication.
Each of the three phases requires different levels of communication activity. From a best practices standpoint, (as this diagram portrays) communication should be involved in the entire spectrum of M&A activity. The degree of communication involvement will certainly be driven by several key considerations, including:
- The nature of the M&A activity itself.
- The legal constraints.
- The desired market and customer/client impact.
- The degree of expected employee impact.
- The expected public exposure and interest in the transaction.
This phase is typically thought to be the domain of the lawyers, accountants and strategic deal-makers—not so much that of communication professionals. Communicators are often left out of this phase because of the fear that the prospective deal may not come together and/or the concern that the deal is so sensitive that only those who are absolutely necessary should be involved.
However, the sooner the communication professional is brought into the circle of confidence, the more thorough the planning and the more efficient and effective the implementation will be, thus ensuring a smoother path to integration and ultimately positive business outcomes. There is also a growing recognition that the perspective of the communicator could be a valuable one, adding dimension to the deliberations and considerations that can help influence the nature of the deal and the resulting post-deal organization.
In the pre-deal phase, the general nature of the intended deal starts to take shape and is formalized by a “Letter of Interest” and the signing of a confidentiality agreement by parties on both sides.
Doing the deal
In the second phase, the acquiring company pursues and analyzes detailed information about the target organization and the deal potential which is known as due diligence. A “Letter of Intent” (to proceed with the acquisition) often initiates this phase, where information-gathering and analysis take center stage. As the analysis continues, the M&A team asks:
- Does this transaction make sense from a strategic business, financial and human resource perspective?
- What are the compelling reasons to proceed?
- What are the impediments to a successful culmination?
- What markets, products and customers need to be considered?
- What are the critical factors necessary for success?
If the information reveals no surprises, and the situation appears to meet the expectations of all parties, then planning shifts to consideration of post-closing issues. This includes high-level assessments of talent, cultural fit and communication—not to mention the matters of products and services, markets and customers, employees and unions, and the trade and community news outlets.
After the closing and signing of deal contracts, the work of implementation begins, which requires a considerable communication effort. Here the focus sharpens on not only maintaining value (keeping mission-essential services and products going to customers) but also beginning to build the added value that the merger or acquisition promised. Where only minimal integration of the merging companies is required, there may be few change management challenges. But where greater integration (assimilation) is needed, the work is much more comprehensive and requirements for communication activity much greater.
Timing in M&A communication deserves special comment. Information cannot be prematurely released to any constituency without putting the entire effort in jeopardy. Conversely, when information delivery lags, it delays important post-closing actions. Delayed communication also runs the risk of having employees learn about the transaction from external sources—not from their leaders. The prospect of a merger or an acquisition presents any number of challenges, but none is greater than making sure communication is comprehensive, integrated and timely.