Facing a possible surge in mergers and acquisitions this year, many CEOs are trying to ensure their organizations are ready to take the leap into new acquisitions and integrations. If you are such a CEO, it is well worth keeping one of the most critical success factors on your radar: communications.
In the complex stakeholder landscape of M&A, the quality of communication can accelerate value at the heart of an acquisition. Yet while major deals bring significant opportunities, they also carry risks. The convergence of two strategies and cultures places leaders in uncharted territory and may create uncertainty for employees. Customers and suppliers are often concerned about the potential disruption, and investors want assurance of the acquisition’s impact on financial performance. Considering also the specific legal requirements before day one, it is clear M&A requires a careful and comprehensive communication approach that delivers consistent messaging all the way through—including a crystal-clear deal narrative, a tightly choreographed announcement, and an integration plan for day one and beyond that firmly anchors the two organizations in one new vision.
The challenge? In our work supporting M&A, we frequently see companies face communication pitfalls. The following pitfalls are the most significant ones we see at each stage of the integration journey. We offer guidelines for avoiding each one.
Pitfall 1: Pre-announcement—Forgetting to create a leak contingency plan
Why it matters: Before the announcement, it’s necessary to prepare a contingency plan, because even with the best of intentions, leaks occur. The more people who are brought into the tent, the higher the likelihood of a leak. When leaks occur without a plan to handle them, you risk losing control of the narrative—to employees, investors, customers, and other stakeholders.
What to consider: First, make sure you establish strict communication controls and guidelines to minimize the risk of a leak in the first place. Then plan for one. A sound leak strategy will include a clear escalation and decision-making process, with messaging crafted and ready to go to employees and external stakeholders. Then, if a leak occurs, you can activate your contingency plan fast and limit the fallout.
Pitfall 2: Announcement—Focusing just on the financial rationale
Why it matters: Through due diligence and signing, you work on the financial and business rationale for the deal. This usually drives your first external announcement because you have a fiduciary obligation to explain the deal to investors. But you can’t just leave it there; it’s also important to contextualize the message for employees. Your colleagues may benefit from a different tone and additional messaging on announcement day. During an acquisition, many employees are afraid of losing their job or fear they won’t have a fair chance of promotion. Early, frequent, and effective communication can be vital for getting internal buy-in and retaining talent.
What to consider: This is where communication becomes about engagement—supporting colleagues through the emotional as well as practical journey. Even in the regular course of business, internal communications, investor communications, and external communications sometimes fall out of sync. But particularly when a company is engaged in a large deal, it’s essential that the primary deal story remains consistent even as messaging is tailored to and contextualized for each stakeholder audience.
On top of practicalities, messaging to employees should include a more personal element, responding to their potential hopes and anxieties: Considering the integration pathway, what is the authentic tone for talking about the acquisition? Assuming the growth trajectory is positive, what is exciting for employees about the deal? What assurances can you share about the future? How can you express respect for and appreciation of each company’s values, achievements, and skills?
Pitfall 3: Kicking off the integration planning—Underestimating the complexity and volume of work
Why it matters: The communications workload will likely be significant and the complexity high, so it’s easy to underestimate the requirements. Before day one, most M&A workstreams are purely planning, but the communications workstream is unique; it must drive communication from announcement. Integration team members, drawn from both companies, will be preparing high-stakes communications to their employees, leaders, investors, customers, and business partners. They will need to navigate major pressure points, such as day one, when ten to 20 communications may be due on the same day, all with information gathered from workstreams, cleared for legal and executive approval, and perhaps translated into multiple languages. They will prepare leaders to deliver key communications, while also leading the strategy and content for all integration announcements. If the companies are truly integrating, they will also need to plan how to merge their own communication functions and combine both companies’ channels and communications calendars after day one.
What to consider: If possible, appoint an expert communications team with representation from both companies. Ideally (and essential to major deals), you will have a strong, strategic communications leader from each company, with dedicated capacity, working closely with external and/or investor communications. These leaders should have a seat at the top table in discussions around the acquisition. They need to understand how value can be protected and captured through the acquisition and be equipped to define the communication pathway. They should have the confidence and authority to engage company leaders and coach them. They will also need a team to help generate and cross-check extensive content.
Pitfall 4: Pre–day one—Going quiet
Why it matters: Tempting as it is, going quiet is the wrong thing to do ahead of day one. Why? Because people will most likely talk, regardless. Communication vacuums are dangerous. Employees and customers are unlikely to wait until day one to decide what they think of the deal. Competitors may be actively trying to poach during the period of uncertainty. Implicitly, you are leaving others to tell your story if you don’t tell it yourself.
What to consider: Instead of going quiet, take the opportunity to steady and ready the organization. There is plenty you can communicate during this time while fully respecting the vital legal constraints. You can foster a ready-to-unite mentality by building understanding of publicly available information on each company’s products and services. You can establish the credibility of future leaders and reassure employees about the progress being made. Subject to regulatory constraints, you can announce interim decisions on your plans for after day one.
While the pace of your external communication can be slower, there will still be many sensitivities you can address before Day 1. Are there top customers whose contracts are up for renewal? How are investors reacting? Do any external stakeholders have misunderstandings or unwarranted fears that clear communication could alleviate?
Pitfall 5: Day 1—Assuming all day ones look the same
Why it matters: Day one celebrations sometimes feel generic, consisting of basic welcome messages and broad future hopes. Instead, think of day one as an invaluable opportunity to set the tone and get the organization positioned for the path they are traveling. If you don’t tailor your approach, you risk giving up a chance to build value, and you could even reduce value through communications that demotivate or confuse.
What to consider: Think carefully about and tailor your messaging to the integration pathway, the pace, and the value of the deal. For example, if a key source of value will come from cross-selling, day one could be an opportunity to run show-and-tells led by product experts across the businesses. You could even consider arranging for a key customer to join a day one townhall to share their hopes for the united company. This could instantly build deeper understanding, set a tone of customer orientation, and accelerate the ability to cross-sell.
Also, think about the emotional tone you set. For example, if the integration pathway isn’t positive for employees, a very exciting, celebratory tone on day one can feel insensitive if followed soon after by painful restructuring.
By considering these nuances you will clarify the best strategy for day one and design a milestone event that powerfully reinforces your vision.
Pitfall 6: After day one—Losing momentum
Why it matters: In our experience, getting through day one and the immediate aftermath takes so much focus that momentum can drop afterward. Yet, with new ownership established, day two is when the real work can begin. Very likely, many concrete changes will occur, such as restructuring, leadership appointments, portfolio rationalization, integration of IT platforms, and branding changes. All of these can radically affect employee productivity and morale or customer satisfaction. Other changes, such as cultural integration efforts, are less tangible but equally significant. In our January 2023 survey of almost 1,100 M&A leaders, respondents’ top reasons why integrations fail were lack of cultural fit and friction between the acquiring and target companies. Great communication contributes to easing these frictions and building a united company.
What to consider: After day one, push forward to capture the value of the deal. Maintain the communications team and set up a detailed post–day one communication strategy to maintain momentum and drive successful change. Staying tightly bound to the integration road map, prepare and guide employees through change and manage any branding or customer service changes proactively. In parallel, define cultural objectives clearly and equip leaders to articulate and role model the behaviors and mindsets needed for the merger to succeed.
The success of any transaction ultimately relies on numerous people’s actions, driven by feelings and thoughts about the acquisition and integration pathway. Managing this successfully is a major leadership and communications challenge. Falling prey to even one of the pitfalls described here can limit success, while avoiding them can enhance your relationships with your employees, key talent, and customers—helping bring your new organization to life.