Communications Can Make or Break an M&A Deal

Preparing to announce that your company is merging with or acquiring another company is an exciting and hectic time. No one gets much sleep, and everyone is riding high on adrenaline and caffeine.

When all systems are “go”, the transaction is announced to the public, and everyone pats themselves on the back for a job well done. But was it?

Did the media get the story right?  Did the analysts covering your company echo your talking points?  Did you find you were getting asked questions that you thought were clearly conveyed in your press release and conference call?  Did you spend the next 6 months explaining the rationale behind the transaction, trying to convince your shareholders this was a good move?

Unfortunately, too many companies are not as successful as they hoped to be with their M&A efforts. There is no shortage of scholarly research on why mergers fail, and the failure rate is extraordinarily high. Integration costs, company culture issues, and underlying business issues are all to blame.

One issue that deserves more attention is how the merger is communicated to key stakeholders.

Management can forget that analysts and shareholders don’t have as much information as the management team. Stakeholders are playing catch-up to understand the logic and value of the deal. So too often, management decides to undertake the transaction, and shareholders don’t get it.

Too many companies have found this out the hard way, having to invest hundreds of hours educating their audience. Management ends up with less time to focus on the business and integration when they are distracted by re-communicating the value of the merger.  Plus, the costs of a failed merger to shareholders are upwards of several billion dollars.

How can you increase the likelihood of success?

Get an unbiased opinion of what your audience will hear and where they think the story falls apart.  Armed with this knowledge, you will have the opportunity to refine the company messaging, think through the questions management didn’t expect, and identify where the team needs to connect the dots for your audience. Doing so will enhance your communications with your shareholders at a critical moment in the company’s history.

Can you afford not to invest the time now?

We know time is of the essence and companies have precious little to share in the early stages. Seek a fresh perspective from a team that has no vested interest in the transaction and has more diverse and varied experience than a typical PR team. Conduct a Q&A session. You need a fresh perspective, a macro view, as your true audience is more diverse than the people focused on your specific industry.  If your communications are directed to the most diverse audience, chances are, the people who specialize in your industry will understand it, too.