Employee Engagement Before Integration
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In group of companies setup, it is often seen that employees within the subsidiaries are not informed about the mergers even during integration phase. From the management point of view this is to protect the confidentiality especially if the companies are publicly listed. From the employees point of view, they feel untrusted and they feel they are left behind.
What do you think is the best approach to follow in such situations? Please include examples from your experience.If employees are getting wind of the transaction prior to closing, it would be ideal to share a little information if it can put them at ease. I would think employees should definitely be informed during the integration process so they can support if needed. I would try to have an agreement in place with the seller on when and how the initial communication is made with internal teams and try to agree upon sooner rather than later once the deal is close to final. Sometimes sharing a little bit early is better than the destruction that gossip can do.
this is the case in many processes I have seen. while the confidentiality aspect is important, there is no excuse for not having a plan on how to involve and communicate to employees
An approach is to balance confidentiality with transparency by providing timely, high-level updates to employees about the merger process without disclosing sensitive details. This may help to build trust and reduce uncertainty while maintaining necessary confidentiality.
Although confidentiality must be preserved until deal signing, it is extremely important to have a solid strategy and communication plan to employees of the target company as soon as the acquisition is signed / announced. Talent is always one of the key reasons to acquire a company, and appropriate change management is key to ensure key employees will remain with the acquiror.
This is a hard one, particularly if you are publicly traded as there is very little you can say. I think transparency to the amount allowed is necessary. That might mean saying things like ‘I can’t go into details at this point, but we and the board are pursuing all options to create value which may include …’ At one of my prior companies, the CEO was asked if we were selling the company, which he said an adamant no to – just for him to find out the next day that a buyer reached out that they ultimately sold to. It destroyed colleague trust significantly.
In the ideal M&A deal only those who need to know are aware of the potential transaction. Those who are involved should understand the importance to maintain confidentiality. Depending on the size of the target, the owners do not want anyone to know but they need to gather data and people are involved pulling the data and they start to question/talk about the requests. In my opinion the target owners should know prior to the start of the transaction who they can trust to keep confidentiality and allow a potential bonus based on this.
As to the employee communication it is critical as of Deal Signing to have all employee meeting discussing the deal, the reasoning, next steps etc. The employee communications is critical to stopping attrition.
The topic is broad, but effective employee engagement is essential for successful integration. This is because integration requires a cross-functional and cross-company team, and ultimately, nearly all employees from the participating companies must engage in the process. The focus should be on how strategically the employee engagement plan is designed and how effectively it is executed throughout the overall M&A process to support integration success and further business development. Here, I would like to share a few key elements of a strategic communication plan:
– Who: Identifying stakeholders based on their roles in the M&A process.
– What: Defining the content and level of information to be shared.
– When: Establishing the timing of communication according to the phases, milestones, and other stages of the M&A process.
– How: Determining the methods of communication, such as town halls, company intranet announcements, team meetings, etc.My earlier response was written before I had the opportunity to review the background of the topic. Since editing my response is not possible, I would like to add some additional thoughts here. While it may be complex and there may be valid reasons to delay engaging with employees from the target company until the integration starts, the approach should still align with the M&A and integration goals. If the goal is to retain key talent or maintain employee trust and loyalty within the combined company, the engagement plan should be established early and carefully executed throughout the M&A process.
While confidentiality is of utmost importance to protect the Deal, employees should be provided as much transparency as possible for a successful PMI. As part of the IMO, we’ve engaged our Legal team as a key part of the messaging / communication effort. The Legal team advises what information can be shared with whom across: AcquireCo, TargetCo, and all stakeholders. At a minimum, all employees must be provided messaging / information that is made public outside the company.
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