Communication strategies in mergers and acquisitions(2)

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By Goke Ilesanmi

Last week, we said the concept of mergers and acquisitions has long been considered one of the fastest routes to business growth, yet, experience has shown that most mergers fail to achieve the expected synergy and are more often counterproductive at the end of the day.

    We added that post-merger integration challenges are many, stressing that even though nobody expects structural changes occasioned by mergers to be so smooth.

    We said one of the strategies for achieving successful mergers or acquisitions is effective communication. We stressed that overwhelming experience indicates directly or indirectly that people issues are the main reason for take-over failures and communication is still central to the people issues.

Communication does not come easily to many managers who throughout most their careers have dealt almost entirely with hard facts and figures, not the soft people issues. These managers may not be good enough as leaders. Many managers are uncomfortable about giving tough messages to their staff, and being honest with them about bad news of job cuts or site closures. Mergers involve many technical and complex issues required by law, the stock exchange and other regulatory bodies. Communication is not legally required and so it is an easy area to drop down the priority list. Communication is not easily quantified and measured, which makes it difficult to grapple with when merger budgets are being considered.


Communication function

The communication function is not always represented at a sufficiently high level within the organisation, and even then the head of the function may not be strategically-minded. Lack of information flow from the upper level of management will cause problems for the first-line managers and supervisors who need to deal with the frontline employees every day. They will not have enough information to satisfy the day-to-day needs of their staff. This creates the dreaded communication vacuum – filled by the grapevine – that will undermine the positive aspects of the merger.


After the merger

After a merger has taken effect, strategic communication is central to the integration of the two organisations into a more effective single entity. By definition, this requires change communication. Effective communication during the post-merger phase is required to ensure a common understanding of the business case for the merger and the vision for the future. It is also required to help people understand and internalise change; keep the organisation focused on customers and productivity; reinforce desired behaviour; promote cultural alignment; help with retention and motivation of key talent; and control the rumour mill.


Good practices       

One of the good communication practices in the post-merger period is to recognise that all merger goals depend on communication. Employees have to be persuaded to believe in the corporate vision and to act to bring it about. This is a communication task. Another practice is to know the communication goals. At all times, with all stakeholders, the goal for communication needs to be kept in the forefront of the mind. Senior managers need to know their constituencies closely and segment them carefully.

   Managers need to be aware of the logistic and cultural factors necessary to communicate with staff in diverse locations. Another thing is to be flexible. Bring the best combination of communication techniques to bear on the situation and be prepared to adjust according to feedback. You also have to listen. Dialogue is the richest form of feedback, but not the only one. Another good communication practice in the post-merger period is to always communicate. Paradoxically, non-communication is still communication because it sends negative messages.

To achieve success in your merger and/or acquisition, you must also follow a framework to help manage the complexity. Understand all stakeholders, know the goals, write a plan, craft messages positively and effectively, select media carefully. According to Kim Harrison, a recognised public relations authority, “Compare the difference between ‘We don’t expect any staff reductions’ and ‘There will be no staff reductions’ and even better, a more positive ‘We all have important roles to play in the future’.” Check senior managers’ commitment to the message and their ability to communicate it consistently, firmly and honestly.

Research shows that out of more than 8,795 mergers and acquisitions deals announced worldwide in 2008, the vast majority were friendly. From a communication perspective, friendly deals have three phases: pre-deal planning; deal announcement and post-integration. In contrast, hostile deals, which require persistent crisis management (communication), have more phases, and can include lobbying shareholders for proxy votes and litigation.

Planning mergers and acquisitions communication may be a communication team’s most confidential assignment—much more so than quarterly earnings—and their most important one, too, since a mergers and acquisitions deal is a great opportunity to reposition the company. Ideally, senior management will invite you to the table as part of a cross-functional team that could include general counsel, investor relations (for public companies) and human resource as soon as the deal looks real.

One of the initial challenges faced by the communication team is to create and finalise the merger plan and documentation within a short time frame, and without a lot of information, since details change during each negotiation session.

To be continued

GOKE ILESANMI (FIIM, FIMC, CMC), CEO of Gokmar Communication Consulting, is an International Platinum Columnist, Professional Public Speaker, Career Mgt Coach and Certified Mgt Consultant. He is also a Book Reviewer, Biographer and Editorial Consultant.

Tel: 08055068773; 08187499425

Email: gokeiles2010@gmail.com

Website: www.gokeilesanmi.com.ng

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