Filling the void: Change communication in M&A processes

14th March 2024


The period between an initial announcement and final closing of a significant transaction is filled with uncertainty. As a result, it’s also a particularly challenging time for communicators.

Prior to deal approval from company directors and competition authorities, the parties involved can only disclose limited details of their plans to internal audiences. But, during this period of uncertainty, it is more important than ever to control the flow and messaging your stakeholders receive, so they are not unduly influenced by speculation – both from inside the company and the media.

Communication is crucial: not getting it right from the outset could set up the whole project to fail. More than two thirds of mergers fail to realise the synergies they’ve set out to achieve. A vast majority of mergers don’t boost shareholder returns. And, about 50% actually destroy value. More often than not, these failures aren’t due to a faulty strategy or rationale, but ultimately come down to execution – and of course the human factor.

Mergers are difficult because they are emotional. They always entail a disruption felt very directly on individual frameworks – previous roles, colleagues and identities. This causes scepticism, anxiety, frustration and resistance to change.

It shouldn’t come as a surprise then, that communication is a key success factor for any merger. Good communication underpins and supports change throughout the process, building internal alignment and maintaining employee engagement. And yet, the first casualty in any deal is often communication.

There are several common pitfalls. Often, top management is caught up in the enormous effort to make the deal happen – financing, legal nuance, informing investors, updating the board. Meanwhile, communicators are restrained by regulatory rules. The acquired company assumes responsibility for communications with the new owner, who doesn’t have the access or insights to adequately address its future employees and leaders.

Inevitably, this void will be filled by rumours and speculation. It also leaves the interpretation of the process to external and internal stakeholders – trade unions or work councils which are regularly talking to the media – who will drive their own agenda. The consequence: uncertainty, loss of key talent, and even a loss of productivity.

So, in the absence of all the hard facts, what should communication look like? Here are four Ws companies should adhere to:

  1. When – be transparent about the process

Change communication begins immediately after the announcement of the deal – or indeed a leak in the media. At this stage, the main concern of people will be the final setup of the merger: What exactly is going to change; will I have to move; will I still have a job? However, since this is exactly what is going to be worked out over the coming weeks and months, nothing definite can be communicated on the matter.

But, that doesn’t mean there is nothing to say. As much as possible, communicators should establish transparency on the overall process. This includes explaining legal restraints and why so many questions will remain open until closing.

In this time of intense uncertainty, it’s important to provide a regular and reassuring touch point for employees. It should be made clear at every step of the process when people can expect further communication with more detailed information. And, importantly, they should be assured that they are a top priority stakeholder as the process evolves.

Developing a strategic roadmap is essential to define milestones and occasions for communication. Communicators should diagnose the change impact for different stakeholders and determine their specific needs, as well as the most effective channels to reach their internal audiences. A clearly defined communications cascade ensures that all internal stakeholders are informed at the right time.

Now is also the time to set up and prepare measurement and evaluation tools that allow for the fine-tuning of communications throughout the process.

  1. Why – provide a meaningful perspective

Change communication needs to focus just as much on the emotional as the factual side of content. In the absence of hard facts, communicators should therefore convey the broader context and “Why” of the acquisition. What is needed is an attractive vision of the future: a vision that invites people to be part of the new company and articulates value for different stakeholders beyond the shareholders’ perspective. Top management will likely have spent months working hard to sell the deal to investors so it’s easy to forget that the same arguments won’t necessarily transpose to internal audiences. They have very different priorities and perspectives.

An integration narrative translates the rationale behind the merger into punchy, emotive key messages, offering an overarching and meaningful perspective for individual employees. It forms the content basis for all internal communications in both companies, ensuring consistent messaging throughout. A corresponding integration motto and key visual with high recognition value should serve as a framework for all internal communications.

The integration story doesn’t need to be overly specific, but it should reflect the nature of the deal. Is it a merger of equals or a straightforward takeover? Will the future culture and working practices really be “the best of both worlds”, or is it a matter of swiftly integrating the smaller party? How will the proposed synergies be created?

Naturally, these questions matter deeply to employees so there is no point hiding uncomfortable truths in your internal communications. Honesty is key. These fundamentals need to be addressed in a way that respects the heritage and strengths each party brings to the table, but also individual sacrifices. Attempting to skip round these issues because they are uncomfortable is more likely to create problems, for morale and productivity, and indeed for the deal.

  1. Who – support your leaders

It is a common misconception that employee resistance is the main barrier to an integration process. In fact, resistance is often just as strong – if not stronger – at middle and senior management levels. Possible effects include destructive behaviour, power struggles, delay of important decision making and information silos.

Executives are crucial to the success of a merger. However, they often find themselves in a difficult position. They must lead their teams in times of uncertainty and ensure the continuity of daily business. At the same time, they are anxious about their own future in the company – especially as the first staff synergies are usually realised at the management level.

Executives should have clarity about their own role as early as possible in the process. This enables them to communicate more effectively with their teams, which is the very purpose of internal communications. To be able to fulfil their role as leaders, they should have an information advantage over their employees, together with a clear mandate to cascade relevant detail.

A specially branded ‘Integration Newsletter’ is often the right vessel to ensure continuous process updates. In addition, Leadership meetings (town halls), regular webcasts, and CEO chats or a dedicated email, should allow for access and dialogue with the top leadership team. Online leadership communities can also foster collaboration and exchange between leaders of both companies.

It is important to use the time running up to day one of integration to prepare executives for their tasks as communicators and role models. Change workshops prime leaders for challenges ahead and equip them with concrete communication tools. The focus here must be on actionable outcomes with strategic relevance.

  1. What – prepare the integration

Getting ready for day one as a combined entity takes an enormous amount of effort and focus. After this landmark date, exhaustion often gets the best of everyone involved. However, this is when the integration starts, and the real work begins. Instead of losing precious momentum, communicators should have their next steps planned and ready.

A key challenge in the subsequent integration phase is often to unite different cultural identities within the company. In fact, the cultural dimension is crucial for mergers. In many cases, the two companies were former competitors. They were proud of the things that differentiated them and now they must suddenly become one happy family.

Apart from different business cultures, there are deep-set resistances that can thwart the merger process. To ensure this doesn’t happen, management and communicators need a clear picture of how the companies perceive each other.

Therefore, groundwork for the cultural integration ideally also starts before the actual closing:  qualitative interviews with executives in both companies should ascertain perceptions of cultural differences and strategic challenges. This analysis must then be the basis for developing a common target culture within the management team.

After day one comes the time to involve employees in the design of the new company. It begins with the celebration of the combination, an important symbolic act of togetherness and positivity. In the following integration process, we often advise and support clients on identity and vision processes and on how to jointly operationalise strategic business objectives.

Related Services

  • Internal change communications
  • M&A communications

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Please contact our experienced team to discuss how H/Advisors Maitland can support you in communicating your strategy, goals and performance to the financial markets and the business media.

Adaora Geiger

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