When it Comes to the “Five W’s” of M&A Communications, Don’t Forget “Who”

Effective M&A Communications Require Strategic Outreach to All Stakeholders

There are few announcements more material and more consequential than one disclosing a planned merger or acquisition. While the “what,” “when,” “where,” and “why” of such news may be obvious, do not skip “who.” M&A deals are often transformative for the companies involved and can bring on significant changes for everyone from employees to customers. Your investor relations priorities may be top of mind but maintaining a holistic approach to M&A communications will ensure that no stakeholders are overlooked. What’s more, you will be ready for every potential step of the process, from proxy solicitation to post-deal updates. Use the following guidelines to stay ahead of all aspects of your M&A story.

1. Assemble your communications team: Sure, you will already have an M&A deal team in place but timely and accurate communication with all of your stakeholders will require work beyond the strict purview of the deal team. Enlisting the support of your HR, PR, and sales teams can eliminate gaps in your coverage. The timing can be tricky, especially when information regarding a potential deal is on a strict need-to-know basis, but having a comprehensive plan in place will make the first days after the initial announcement—when you will need to reach out to multiple stakeholders simultaneously—that much smoother.
2. Educate your investors: Your M&A communications are an opportunity to highlight and reinforce the strategic elements that should already serve as a framework for your earnings announcements and other press releases. The deal rationale is the “why” of the story and should dovetail with the company’s overarching enterprise strategy. If there is no obvious fit, your investors will want to know why, particularly if they will need to vote on the proposal. Tying the strategic elements together in a coherent and compelling narrative is not only a best practice, it is foundational for any subsequent proxy solicitation that may be needed.
3. Keep your employees informed: At the first hint of an organizational change, your employees will have questions. Lots of questions. They will want to understand the deal’s ramifications—specifically, what it will mean for their future with the company. Your internal communications, starting with a letter from the CEO, should track with your IR communications in terms of both timing and substance, and should identify an internal point of contact who can field questions. This may also be the time to give your employees a crash course in Regulation Fair Disclosure. As employees may become privy to sensitive information before a deal is finalized, it is critical that they understand their duty of confidentiality and the problems and penalties that could result from any unauthorized disclosures to external parties.
4. Stay in front of your customers: Once news of the deal is publicly available, your customers will wonder what it means for them. Does the deal represent significant consolidation within your industry or in a particular market segment? How about vertical integration? Will customers assume price hikes are on the way? Depending on the customer, communication from the CEO and/or a key sales representative is the best way to level-set expectations from the outset. In reiterating the key messages of your IR and internal communications, such communication should highlight whatever operational efficiencies, technological advantages, service enhancements, or new products that may be gained as a result of the merger or acquisition.
5. Consider all other external stakeholders: You might not be in the habit of communicating with local officials or media, but news that may impact the lives of large numbers of voters and taxpayers will get their attention quickly. If the news is potentially damaging to the local economy, such as the shuttering or relocation of a major facility, your company may find itself at the center of a political firestorm. Whether the news is good or bad, being as proactive, transparent and responsive in your communications as possible can go a long way in maintaining constructive stakeholder relations.
6. Keep the updates coming: The bigger the deal, the longer the timeline. Even for relatively small deals, completing all the closing conditions can take several months. If the proposal triggers antitrust scrutiny, the timeline could easily stretch beyond one year. If the post-deal entity will continue to be a public company, it is essential that the acquiring company maintain a robust IR program in the interim. If the company is legally precluded from commenting on the deal beyond the contents of the initial announcement, it should use subsequent updates and earnings releases to reiterate the key messages. Once the deal is finalized, the company should prepare to host an investor day as soon as is practicable to provide an in-depth look at any changes to the enterprise strategy or mid-term outlook. An investor day is an ideal way to connect with your investor base, which depending on the circumstances of the merger or acquisition, may have changed substantially since the time of the deal announcement.

Sharon Merrill Advisors can help you to navigate the challenges of an M&A transaction and communicate with the investment community effectively. We provide strategic support and high-level counsel based on our decades of IR experience across a wide range of industries. Contact us today to discuss your IR objectives.