Communications in mergers: The glue that holds everything together PART
I
Structured communications are vital to clarify
what comes next in a merger, separate fact from fiction, and forge success for
newly combined organizations.
Structured communications play
a critical role in mergers by preventing the distractions that often accompany
them and could even damage the existing businesses. In addition, the
communications plan lays a foundation for the combined organization’s future success. It is one of the few merger workstreams that go “live”
immediately, as soon as merger conversations begin. The communications team
announces the deal and then helps to develop, engage, and manage integration planning and
execution.
A strong communications strategy and plan
promote business continuity by ensuring that the right messages are
communicated and reinforced to minimize the anxiety of employees, boost morale,
and retain talent. They also convey the combined organization’s future vision
and strategy to key stakeholders—both internal and external, including
customers, regulators, vendors, and employees. In this way, the plan builds
momentum and enthusiasm for the merger and corrects any misinformation and
myths that might arise about it.
The communications plan is a vital tool to
inform and influence stakeholders before transactions close, so it is critical
to start early and get the message right, both before and after the close.
The
role of communications across the merger time line
The work and focus of the communications
effort ebb and flow throughout the merger process, reaching critical peaks at
the announcement of the deal, at the transaction’s close, and on Day 1. Each
phase in the merger time line has its own unique communications focus (Exhibit
1).
Exhibit 1 IN THE ORIGINAL ARTICLE
Design and ramp-up
In the design and ramp-up phase, the key
is to have the right people and infrastructure in place. Because time is
usually short, the goal is to get the basics right to land the merger
announcement. After the announcement, the team will have time to refine the
governance process and to add members.
A ramp-up plan should also include one
specific bit of preparation: controlling merger news and responding to leaks.
We often see companies struggle with this not infrequent event. Although a
merger is a confidential process, the story may well leak, given the number of
parties involved. Being prepared with approved responses in the event of leaks
saves time and angst in what would otherwise be a mad scramble to get messages
coordinated on both sides and approved quickly.
Announcement
This is the first opportunity to tell all
stakeholders the strategy and vision behind the merger. How well this stage is
executed can go a long way to extend the merger’s honeymoon period. Crisp
articulation of the strategic rationale forms the basis of multiple
communications tailored to employees, vendors, regulators, and others. These
all reflect the main goal: to ensure that the right message about the merger is
communicated consistently.
Pre-close integration planning
The pre-close period, after the merger
announcement, requires special attention. This is a time when competitors go
after your customers and when top talent is most likely considering whether to
leave the company; some may go for interviews but wait until the close to
depart.
Regularly communicating with customers and
employees in the pre-close period is critical to limit damage to the
organization. One mistake we see companies make frequently is “going
dark”—communicating little or nothing between the announcement and Day 1.
Another typical mistake is avoiding substantive topics and instead offering up “happy
talk” or corporate prattle that is meant to comfort but that no one believes,
except maybe the leaders. Communications should be genuine and transparent.
Employees value having difficult messages communicated in a direct way.
This is also an important time for the
leadership team to look for and listen to feedback, reinforce what’s going
well, and take corrective action when necessary.
Day 1
Day 1 is a time not only to celebrate the
coming together of two organizations but also to give key stakeholders clarity
and guidance. First and foremost is telling employees what’s changing and
what’s not. Too often, we hear of employees who don’t know, on Day 1, who their
new bosses will be or what processes to follow. A structured communications
plan plays a critical role in ensuring that employees are well informed and
equipped to operate seamlessly from the beginning.
The communications team should not only
ensure that the right leaders are in the right locations during Day 1 and week
one but also coordinate town halls and webcasts to facilitate the transition.
This is also an opportune time to mount a road show for top customers and to
address communications to the broader base of customers, reiterating the new
company’s commitment to them. In addition, to maintain continuity of supply,
it’s essential to make vendors aware of key changes and to keep them up to date
even if there aren’t any.
Integration implementation
The work of the communications team
doesn’t end when a transaction closes. In fact, more frequent communications
usually come afterward. In addition to a regular cadence of integration
communications, specific messages about important decisions (such as the
location of headquarters or additional organizational moves) are essential to
ensure that changes are understood and accepted. Many key changes often occur
weeks and months after the legal Day 1, so it’s essential to tell stakeholders,
including customers and vendors, when these changes will take place; for
example, customers should be informed of any alterations to product portfolios
and systems, as well as process changes (such as a single ordering system).
Likewise, vendors should be informed of any changes to payment terms.
Six
steps to building and executing effective merger communications
A six-step process is essential to build,
execute, and constantly monitor and improve merger communications (Exhibit 2).
These steps aren’t meant to be “one and done.” They are usually iterative and
often require refining as the communications and leadership teams learn lessons
during the phases of the merger and get feedback on the initial
communications—and as communications needs evolve. While a company can never be
100 percent prepared, this systematic approach greatly improves its operational
rigor.
Exhibit 2 IN THE ORIGINAL ARTICLE
1. Identify key stakeholders
Every merger has a wide range of
stakeholders, and each kind of stakeholder requires a customized approach and
targeted messaging. Broadly speaking, stakeholders can be classified into two
groups: external and internal.
External stakeholders include investors,
who must be persuaded of the merits of a deal, and analysts, who expect
management to make the strategic and financial case for it. Customers need to
be retained and reassured about continuity of service. Vendors anxiously await
information on what the merger would mean for them. Regulatory bodies and
government officials are concerned about anticompetitive behavior and job
losses. Finally, the general public will quickly form opinions about whether
the merger is good or bad.
Internal stakeholders are primarily
employees of the two merging companies, but distinct groups within them have
different needs. A well-thought-out plan distinguishes between (and tailors
messages for) employees in general, high potentials, and employees at risk of
leaving. In particular, communications with unions or workers’ councils require
careful preparation and often legal counsel. The retiree population is
especially interested in any potential changes to benefits.
Employees are critically important
stakeholders. They must be excited about the new company’s vision and buy into
it. Before they can get there, however, they need to understand what will
happen to them. They are wrestling with many questions. “Do I have job now?”
“Will I have a job in the future?” “Whom will I be reporting to?” “Do I belong
here?” Communicating with employees solely about the greater good, before
addressing their personal situation, will probably be ineffective.
The communications plan must absolutely
address high potentials and critical employees. In a recent merger, targeted
communications and leadership time spent cultivating the high
performers—including one-on-one discussions between them and the leadership on
future career paths—let them know how greatly they were valued. The resulting
attrition for this group of employees, who are often the first to flee, was
much lower than expected.
Oliver Engert, Becky Kaetzler, Kameron Kordestani, and Anish Koshy
https://www.mckinsey.com/Business-Functions/Organization/Our-Insights/Communications-in-mergers-The-glue-that-holds-everything-together?cid=other-eml-alt-mip-mck&hlkid=741abe46e82045b2ae977df1f54f6d0a&hctky=1627601&hdpid=62591e27-c1a4-4e5d-b635-3b4216844fce
CONTINUED IN PART II
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