Effective Communication During Mergers and Acquisitions

Posted by Tina Schuelke Tina Schuelke
By Laura Dowdy, Change Management Specialist

Mergers and acquisitions are a difficult change to manage.  Depending on whose research you choose to rely on, mergers have a failure rate of anywhere between 50 and 85 percent. One KPMG study found that 83 percent of these deals hadn't boosted shareholder returns, while a separate study by A.T. Kearney concluded that total returns on M&A were always negative.  The causes of the failures are somewhat difficult to diagnose and categorize, and what makes for a successful merger versus an unsuccessful merger is only derived by careful case study practice.  Effective change management, caring for the “soft side of change” can mean the difference between a successful merger, one where key employees stay on and the two companies truly become one, or a merger fraught with infighting, disinterest, and high turnover.

“We needed to communicate better” shows up among the top five reasons for merger failure.  

Face to face communication has been shown to be the best way to communicate for optimal change management results.  This can be a more costly and time intensive method than a companywide memo, but the return on investment will be far greater.  Face to face communication allows the employee to ask questions and for you to “check the vitals” of the people involved to see how the merger is being viewed.  You gauge whether or not your messages are being received the way you intended.  

For example, you may have told an employee not to worry; they won’t lose their job due to the merger.  This seems like a pretty straightforward positive message.  However, the employee may not be feeling very positive about the information they received.  They wonder if their job will change, if their pay/ benefits will decrease, or their manager will change.  It is vital to get that feedback and complete the cycle of communication.  

Getting feedback will allow you to retool your message to be more effective and thereby better manage the people side of your merger.  It could be as simple as needing to rephrase your message or have a different person deliver it.  There could be a larger root cause, such as a lack of trust or difference in company cultures that needs to be addressed.    When you create feedback loops and respond effectively to what you receive back about your communications, you will be one step closer to a more successful, more fluid, and more profitable merger.  

Talk to us at Change Management | Communications Center if you need some help creative an effective communication plan and learn best practices for the change you are working on.