Watch what you step in.
Mergers and acquisitions can be perilous ventures—missteps are all too easily and commonly made. According to the Harvard Business Review, failure rates for these transactions lie between 70 and 90 percent.
“So many acquisitions fall short of expectations because executives incorrectly match candidates to the strategic purpose of the deal, failing to distinguish between deals that might improve current operations and those that could dramatically transform the company’s growth prospects. As a result, companies too often pay the wrong price and integrate the acquisition in the wrong way.”1
Pennebaker has had the good fortune of working with many companies, helping them formulate brand strategies as they merge or acquire companies. We have also helped companies rectify past decisions that were damaging their brands.
What could possibly go wrong?
In all honesty there are lots of reasons as to why mergers and acquisitions often don’t live up to expectations, but failing to communicate your brand strategy is a surefire way to complicate what can be an already challenging time in your career.
It’s very tempting for management to lock in on one or two target audiences when communicating brand strategy. Communication to investors is often the focus of the initial communication, since stock price is often affected by merger news. Keep in mind, however, that other stakeholders will be paying close attention and will want to know how they are going to be affected by the merger or acquisition.
Your people are your greatest asset: Get them on board.
Employees can be your biggest advocates or detractors during a merger or acquisition. Employees of both companies will feel that their cultures are being threatened; lack of communication will only cause speculations and rumors about the mergers to increase the perceived threat to employees. This frequently leads to attrition. In our experience, when employees understand the vision for the company, and see their role in the success of the company, they actually get excited about the changes. Front-line employees will have a lot of access to customers, who will be asking how the merger is going. It is vital that employees know what they should say, and that management has a stake in what is said.
Keep Customers Informed
Customers will also want to know how they will be affected. They’ll instinctively assume that prices will rise and service quality will fall. You have to know what to tell them, and make sure they are aware of the benefits the merger will bring them. An elevator speech for all front-line people is critical. Once you know how you will communicate to customers, it’s important to stay on message at all times and follow up on your promises.
Don’t Forget About Where You Live
If the companies are well known in the communities in which they operate, you will get calls from reporters and community leaders. They’ll want to know if jobs will be lost, facilities shut down, etc. You need to know what to tell them, and it has to be in line with what you are telling other stakeholders.
Partner with Your Partners
Suppliers will also want to know how they will be affected. This group can be overlooked, especially if you rely heavily on partnering with outside agencies. Will the IT systems used to bill you or the acquired company change? If your supply chain is disrupted, customers will not be happy.
Don’t Forget About Your Next A-Players
Recruiting could also be affected by the merger. Frequently, consolidation leads to job elimination. Recruits may see that as lack of opportunity. If new opportunities result from the merger, you will want to highlight those when communicating with potential employees.
Mergers and acquisitions can help your company achieve new heights, but success is far from guaranteed. Careful consideration of how you deal with the acquired brands, along with how you communicate that strategy, can seriously affect your ability to reach your company’s business goals.