HR Management & Compliance

Four Merger and Acquisition Communication Tips—Training to Boost Shareholder Value

In an article originally published on HR.BLR.com®, strategy communication expert Sherry Scott shared how to facilitate a successful transition during a merger or acquisition. Over the course of today and tomorrow, she presents her four tips in the Training Daily Advisor.

Scott is the chief operating officer and communication practice lead for Gagen MacDonald, a strategy execution consulting firm that specializes in employee engagement, culture change, and leadership. A certified woman-owned business, Gagen MacDonald has helped numerous Fortune 500 companies, such as DuPont, GE, and Johnson & Johnson, engage their employees and become better places to work.
If you haven’t yet navigated a merger or acquisition (M&A) in your HR career, 2015 will probably change that. Global M&A activity hit nearly $1 trillion in the first quarter and shows no signs of slowing down.
Surprisingly, many M&A deals fail to achieve their anticipated results—in fact, various studies indicate more than half of deals actually destroy shareholder value. Why? More than 60% of realized deal value comes from “soft factors” like strategic alignment, organizational integration, and low employee resistance. You heard that right: Great M&As happen only when dealmakers, communications, and HR teams work in sync.
Here are four M&A communications tasks we recommend to engage employees, leaders, and shareholders and to maximize long-term shareholder value.

1. Create a Compelling Story for Change.

Of course, any good M&A deal must make sense in terms of numbers. But great M&As result only when leaders tell a compelling story for change that goes beyond dollars and cents. What’s the exciting future that lies on the other side of this transaction? How will combining these two companies be good for employees, customers, shareholders, and the world?


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Communications between deal announcement and deal close can be tricky. Depending on the deal and regulatory requirements for close, the acquiring and target companies may not be allowed to communicate or coordinate with each other’s employees.
In these situations, a compelling story for change will need to be developed, and disseminated, independently at each company. It’s not enough to explain the deal rationale in terms of the transaction. You need to tell the story in visionary language to help employees imagine—and get excited about—the combined company’s future.
The lesson: We can’t segment stakeholder groups anymore. Your communications to Wall Street reach Main Street and vice versa; your employees will parse these early communications carefully. Many companies, barred from communicating directly with all employees before close, have used external microsites effectively—think of these as an early “getting to know you” initiative.
Not only do employees need to hear this story from the top, but they should also learn how to tell it themselves, in their own words. In leadership communications trainings, we equip leaders to be able to tell this story in an authentic way that reflects their personal experiences and speaks to their unique audience. When leaders “own” the story for change, employees can more clearly see themselves in that future and work effectively toward realizing it.


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2. Tell Your Employees Directly.

When managers deliver the news directly to their staff about an M&A, the deal is two to three times more likely to yield positive results. Despite this, more than one-third of employees impacted by an M&A deal first learned about it through the media.
Telling your employees directly, either simultaneous to a media release or immediately afterward, has numerous benefits. It establishes crucial trust, puts the company’s stamp on the story for change, and it sends a clear message to employees: We’re in this together.
What does “direct” communication with employees look like at the announcement stage? We often recommend sharing the deal press release via e-mail, followed immediately by personal Q&A between manager and team. Each company’s CEO may address their respective employees in a live or virtual town hall, via e-mail or video, or some combination of these.
Again, before deal close, communication strategies that cross company lines may be subject to regulatory restrictions, and facts will be necessarily limited. What’s important at this stage is putting a human face on the message to employees. Let them know they aren’t an afterthought in this news, but a crucial component of the deal’s success.