Acquisition Communication

Of all the balancing acts required in selling your company, the biggest arises around confidentiality and communication. As an owner, you have many reasons for keeping information about a potential or pending sale on a need-to-know level until the ink is dry on the deal. At the same time, as a steward of your employees and customers, you want to give them information they need to prepare and adjust to the idea as well as the actuality of new ownership.

Because knowing when to tell who, what to tell and how much detail can be overwhelming, many owners put off communicating until forced to do so — usually because the rumor mill has ramped up to the point of hurting productivity.

Uncertainty and anxiety around change can cause Merger Syndrome — chronic stress that impedes judgment, cognitive alertness, decision-making quality and even cause physical illness.

By putting communications planning on the same priority level as due diligence and financing, you can avoid distractions and costs, including:

  • Losing key managers who have burned out because they either don't know what's going on or know what's going on but don't know what or when they can tell their employees.

  • Losing high performing contributor employees — see reason above.

  • Decreasing productivity and increasing errors because employees are stressed and distracted by rumors and misinformation.

  • Increasing waste and rework due to quality decline — see reason above.

Over the decades we've been working with owners to sell their companies, we've identified 5 communication practices that can prevent the kind of losses identified above and create the right employee environment for a smooth transition.

  1. Start planning early. You should start planning your communications as soon as you start considering a sale. A communications audit identifies your constituencies, the methods you use to communicate with them, how effective those methods are and how you can improve. Working out the kinks in your communications before you begin the selling process reduces the likelihood of communications breakdowns during the sale and transition.

  2. Get professional help. If your senior leadership team does not include an experienced communications professional, consider hiring or engaging an agency that specializes in corporate communications or public relations. This is a distinct skill from marketing and advertising. Include this person or the agency team lead in all internal and external deal-related discussions from the beginning. If you have a communications professional on staff who is not part of the senior leadership team, elevate them to that level. 

  3. Understand your constituencies, subgroups and their needs. Within your employee base, you'll have subgroups with distinct needs and characteristics. You'll have senior leadership that will be directly involved in the deal process, middle management that needs to keep things running while senior leaders focus on the sale, day-to-day operations personnel, etc. Create a matrix for each group that identifies their key concerns and questions in the order they will process them — a Maslow's Hierarchy of Needs for communications

  4. Create a timeline for communications to all constituents. You won't have exact dates yet, but you can count backwards from the date the deal is publicly announced. (Call it Deal Day or D-Day or something else easy to remember.) Be sure to build in time for reviews, revisions and approvals. 

  5. Know what to do when information leaks — because it will. Have a plan for responding to questions about information you haven't yet shared. The press may begrudgingly accept “no comment,” but your customers, employees and shareholders won't. With your communications professional and leadership team, think through all the “what ifs.” It's perfectly acceptable to say, “I don't know at this time, but I will share information about that as soon as it's available.” Just make sure you follow up. Create a system for tracking questions and providing information. And have an emergency communications protocol — who decides what is said, who says it, who absolutely needs to approve and what is acceptable turnaround time.

It's easy for owners and senior leaders to focus so closely on the technical aspects of the deal that they forget the most valuable assets in play — customers and employees. Communicating early, clearly and openly helps mitigate resentment and confusion and leads to a more seamless transition.

The team at Bridgepoint Investment Banking has nearly 200 years of experience in capital raising and mergers and acquisitions. We understand the importance of confidentiality and clear communication within the deal team and throughout your organization. If you're considering selling your company or a portion of equity in the company, contact us for a confidential, no obligation consultation.

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