Communications Critical for Success in M&A Game

Makovsky

Today’s financial headlines are replete with stories heralding major acquisitions. Charter Communications’ takeover of Time Warner Cable, Verizon’s planned acquisition of AOL Inc., H.J. Heinz merger with Kraft Foods, and CVS’s purchase of Omnicare are but a few to have been announced recently.

According to Dealogic, the total volume of global mergers and acquisition volume stood at about $3.5 trillion in 2014, which was up by 26% over the previous year. Thus far, total deal volumes in 2015 are at $1.4 trillion which could make this a watershed year for deal-making.

What’s behind the boom in the M&A game? Stock prices are high while, at the same time, interest rates are low, giving corporate chieftains currency to undertake acquisitions. In addition, the urge to merge is driven by the need for growth given the uneven state of the global economy.

Often overlooked in the M&A process is the need for an effective and comprehensive communications strategy, one that addresses the needs of all constituencies including investors, customers, partners and employees. While each of these groups will have differing interests, it is important to keep each of them in mind when developing a plan.

Some steps to consider:

Assemble the Communications Team. The team should consist of a senior corporate communications / investor relations executive and should include representatives from the company’s legal and human resources departments. In addition, outside communications should be brought into the planning process as early as possible. The team will be tasked with planning for the announcement of the deal, preparing the press release and other supportive material, and developing key messages as well as the timing of various events. A similar team should be in place on the other side of the transaction.

Identify Your Key Audiences. In addition to the investment community, your key audiences will include the employees of both companies and, quite possibly, governmental organizations; the concerns of these groups will vary but must be taken under consideration. Also, you need to identify the key reporters for outreach efforts when the announcement is made. Addressing their unique interests early on in the planning process will greatly facilitate the integration of the companies later on.

Prepare for Leaks. The larger the deal, the greater the possibility of a leak. Given the widespread use of the Internet, speculation can quickly spread and be picked up the traditional media. In conjunction with your company’s legal department, you should have statements at the ready in the event that you are confronted by questions from a reporter.

Make the Announcement. The standard practices apply here. Host the investor conference call. Schedule media interviews; prioritize the wire services such as Dow Jones, Bloomberg and Reuters given the immediacy and reach of such services.

Take a Multi-channel Approach. Global enterprises operate in many time zones, making it difficult to reach all employees at one time. In addition to in-person meetings, consider video announcements, micro-sites dedicated to the transaction, and e-mail/voicemail blasts to reach employees, partners and customers.

Taking these steps will go a long way towards facilitating a successful acquisition announcement and will pave the way for a smooth integration of the acquired company.

-Scott Tangney