The Foundation Of Successful M&A Integration 

Businessman Addressing Meeting Around Boardroom Table

Change is unsettling and can be scary for some people. It is human nature to be worried about ‘what will happen to me’. When bringing groups together during M&A, much of the fear, uncertainty, and the resulting resistance to change can be reduced through honest, balanced communication. A communications program that is linked to the strategic intent of the integration and that informs, sets expectations, addresses concerns, focuses on the future, and engages people throughout the transition period and beyond is a necessity.

As M&A expert Price Pritchett comments: “Communication problems never seem to remain mere communication problems. They morph into bad morale, loss of talent, productivity decline, and slippage in profitability.”

And with social media, the consequences of poor communication and misunderstandings can become a PR nightmare, literally within minutes.

Communicate to illuminate

Communication is recognised as a critical component in any change initiative and it surprises me that so many leaders fail to execute an effective internal and external communication strategy during M&A. To do it properly requires a strategic approach and a dedicated and experienced resource. It’s not just an add-on to marketing, or an add-on to the CFO’s or HR manager’s day job. When the communications component is left too late or not done well, leaders find themselves in catch-up or fire-fighting mode. Being constantly on the back foot dilutes their credibility and can make them come across as evasive or dishonest to staff, suppliers, customers, the media, and so on.

Good communication is proactive and keeps things moving forward. It needs to be clear, candid, compelling, consistent, and constant.

Staff need to hear the same message, a number of times, in various ways, until it sticks. It is virtually impossible to over-communicate in M&A!

Expectations differ

Leaders and organisations can have very different expectations and practices around communication. This is an important cultural factor that should be explored early in the due diligence process because it has the potential to undermine even the best of intentions.

In a recent M&A we were involved with, the merging companies were at opposite ends of the communication spectrum.

The buyer had a strong and charismatic CEO. He was an inspiring communicator who liked doing the ‘town hall’ briefings and took the opportunity to drop in and talk with staff whenever he could. He had a small executive team that called all the shots. These executives told their direct reports what they needed to know and they were then expected to share the key messages with their teams. There was a small marketing team but no official internal communications resource. Formal communication was sparse but deemed adequate. They had an intranet where CEO updates and everything else of interest was posted and used an external agency to produce a glossy monthly staff newsletter, company videos, and other ad hoc items as required.

Contrast this with the organisation they bought, which had an internal communications team of six headed by a highly experienced general manager. Transparency and open communication were core values the leaders had worked hard to embed. As well as their formal management meetings, they utilised a wide range of communication vehicles to keep everyone up to date. Central to their culture was a process of cascading team meetings. A full briefing pack (including facilitation instructions and supporting materials) would be drawn up for each meeting and provided to every leader, from CEO to team-leader level.

This extensive communications program was a source of pride for the selling company but seen as unnecessary ‘spoon feeding’ by the buyer. It was quickly dropped, leaving a massive communications vacuum for the newly acquired organisation whose leaders now had no idea what, when, or how to communicate what was happening. The stark difference in style was captured when an executive in the buying company said to me, “I can’t believe they keep getting people together every week to tell them that nothing has changed.”

As often happens, both parties in this case felt that their way was the right way. Although they tried to come up with a ‘happy medium’ utilising the acquired communications team, it didn’t work and communication remained a major issue throughout the integration period. In situations like this, it is often better to partner with objective, external experts to help capture the essence of the united culture and draw people together in a fresh way.

To your success,

Linley Watson
Australasia’s Authority on M&A Culture Integration