In response to the growing sentiment that M&A activity will accelerate in the second half of 2012, Financial Profiles recently co-hosted an M&A panel with legal and financial experts discussing strategies for maximizing the value of M&A transactions. Afterward a number of people said to us, “We certainly could have used some communications experts when we sold our company a couple of years ago. What you discussed is so important.” Following are some observations that we shared with our audience of business owners looking to buy and sell companies.
From a communications perspective, one of the biggest pitfalls in M&A is failure to consider in advance how the transaction will affect all stakeholders. It’s common for management to be so focused on getting the deal done that communicating its rationale is an afterthought. In our experience, putting in place a thoughtful and thorough communications plan and timeline early in the process is the best way to avoid unnecessary issues that can make the transaction even more challenging to complete.
Companies engage us to help them anticipate how a transaction is likely to be perceived by key stakeholders – investors, customers, employees and the media – and how to communicate effectively with each of them to ensure the best possible outcome. It’s important to understand that each constituent will view the transaction from his or her own perspective – the ubiquitous “WIFM” (What’s in it for me?).
A company can proactively drive the best possible outcomes for all parties involved if answers to the following questions are communicated with clarity and with the WIFM top of mind.
• Why is this transaction in the best interest of all of our stakeholders?
• What is the strategic rationale? How will the two companies create more value together than on a stand-alone basis? How can that be conveyed in a few key messages?
• How does the transaction fit within the context of the larger corporate story, stated strategy and industry landscape?
• How will the transaction impact the company’s financial and risk profile? Create value? Provide economic benefits for the business?
• How will contrarians react and how will you counter their concerns?
• Does the transaction support the company’s previously stated capital allocation strategy?
• Will new career opportunities be available to employees? Will concerns regarding job security need to be addressed? What plans are in place to communicate with employees?
• How will customers react to the news and what plans are in place to communicate with them about the transaction?
• What is the integration plan and what are the cultural, organizational, marketing and branding implications for the combination?
• Post-transaction, what will the company look like six or twelve months down the road?
• How can the success of the transaction be measured?
If you are contemplating an M&A transaction, please feel free to reach out to us to discuss how we might help you develop an effective deal rationale that considers the WIFMs.