Mastering M&A communication: Helping employees to deal with the deal


For organizations involved in a merger or acquisition, capturing the synergies of the deal and doing so quickly are major hurdles. The transformation needed to drive such synergies almost always requires a set of complex, even painful, changes. These changes have a direct impact on employees and their work and can create an environment of confusion, anxiety and distraction. In fact, when two organizations come together to create value – such as greater financial power, increased market share or improved operating efficiencies – what often emerges is a set of unprecedented people issues. These issues are exacerbated by the pace of the deal and the dynamics involved in the new distribution of power, control and resources. If managed poorly, such changes can damage productivity, erode employee engagement and delay value creation. But if managed well, the opposite can occur – increased productivity, improved engagement and accelerated value creation.

Communication is essential when managing people issues during complex organizational change. Responsive people strategies help employees make personal transitions as the organization mobilizes for growth. Effective communication can guide employees to let go of the past and embrace the way forward, allowing the organization to realize the value of the deal sooner. Getting communication right also helps to mitigate other M&A risks, such as loss of key talent, diminished customer service and satisfaction, a lack of confidence in leadership and increased resistance to change.

Why engagement and productivity matter

It has become increasingly clear – painfully clear to some organizations – that keeping employees engaged and productive in an M&A situation is fundamental to deal success. There is an inevitable dip in productivity as employees become distracted, even preoccupied, by the change process and the uncertainty ahead. The goal should be to minimize the depth and duration of this productivity dip. Effective communication can not only facilitate and enable employee engagement but can also accelerate it in the new enterprise

Building engagement during change

Whereas employers once focused on “satisfied” or “committed” workers to drive performance, today’s organizations are looking for “engaged” employees. When actively engaged, employees will contribute extra effort, stay connected, remain positive and constructive, focus on the customer, advocate for the organization, and weather changes with resilience. On the other hand, when employees feel disengaged or are “on the fence,” they are likely to watch for signals of failure, take cues from the grapevine, intentionally reduce their work output, distrust company leaders and their messages, and hold back on extra effort. All of this has a direct impact on business outcomes. engagement can lead to decreased productivity and increased turnover; greater deal expenses than expected; wasted resources, including time, money and people; lost market opportunities; and erosion in customer service and satisfaction.

Because employee engagement during an M&A is critical to deal success, effective communication is essential, not optional. Engaged employees, willingly working demanding hours and at an accelerated pace can help the organization to achieve extraordinary change through challenging times. If disengaged or hostile, however, employees can do serious damage – for example, when speaking to customers, making market or budget decisions, or simply talking to each other in the hallways.

Falling short on communication

According to a recent Mercer Transatlantic Study, 75 percent of executives surveyed said that communicating with employees and harmonizing corporate culture were the most important factors for post merger integration. Business leaders recognize that they often fall short in this area. A study conducted by the International Association of Business Communicators (IABC) and Mercer asked CEOs after a merger what changes they would make if they had it to do over again. Their top response: the way they communicated with employees.

A case in point

Take the case of two significant food manufacturers that had been in heated competition for decades, ultimately with one acquiring the other. During interviews conducted with employees for communication planning, some employees admitted witnessing active sabotage to slow down the acquirer’s production line. Even worse, some supervisors knew about these behaviors but ignored them. Surfacing this issue allowed for swift remediation. This type of discord is an important reminder that undue loyalty to the original organization and confusion about the new strategic direction and business priorities can produce very unhealthy behaviors.

Drivers of engagement during change

Mercer’s global What’s Working™ research confirms what engages people during periods of change. When employees feel that change is well managed, 81 percent remain engaged. Conversely, when they feel that change is not well managed, the level of engagement drops to 42 percent. In addition, when employees feel that change is well managed, 70 percent report that they intend to stay with their organization, compared to just 37 percent who intend to stay when change is not well managed.

The difficult job of accelerating change

Organizational change is difficult under any circumstances, primarily because it creates uncertainty – fueling a natural fear of the unknown – and requires people to think or do things differently. In addition, the employee experience of organizational change is often quite different than the view from the top. Because of their access to information and involvement in the decision-making process, top leaders acclimate early to the change and understand the new opportunities inherent in the deal. By the time employees learn of the change, leaders are enthusiastic proponents, ready to drive execution. The broader employee population, however, isn’t there yet. They are more likely to be confused, anxious and fearful – of job cuts, more work, loss of stature, a new boss and the need to adapt to new work processes or technology. They may see only the risks, not the opportunities, and become more resistant as the change plays out. Communicating changes during an M&A is particularly challenging for several reasons:

  • The pace of change. Leaders are under pressure from the board and shareholders to deliver results fast in an M&A and want change to happen quickly. New decisions unfold daily, and employees become unsettled in this dynamic, fluid environment when their questions can – not be answered immediately and final outcomes are unclear. What looks like an important development one day may be superseded by other events on the next. Since the goals and strategic direction of the new business are emerging and evolving, it is impossible to communicate definitively. Without an effective communication process that equips leaders at all levels to converse honestly “in real time” with employees, rumor and innuendo will take over and cynicism will build.

  • Regulatory issues around communication. Regulations dictate the level of information that can be released at various points during a business transaction. The organization must adhere to these requirements, while ensuring that employ – ees have ongoing communication about what’s transpiring and when more information can be released. If employees feel that business leaders are arbitrarily withholding information, it can create serious trust issues. Plus, organizations can be subject to fines if they do not adhere to the regulations.

  • Leaders are further along in processing the change. As mentioned above, senior leaders and employees tend to take very different views of change. In an M&A, leaders are privy to information earlier than employees, so they are further along in processing their personal response to the change, including their own grief, anger or discomfort. They are gearing up to make the change hap – pen just when employees are first learning about the deal. This important dichotomy in the mind-sets of various stakeholder groups must be factored into M&A communication planning.

  • Culture is a major factor. Culture can be defined as the behaviors, beliefs, practices and processes shared by an organization – that is, “the way we do things around here.” Since an aligned culture can help an organization achieve its business goals, M&A communication requires special attention to cultural issues. The blending of two existing cultures presents issues as unique as the cultures that are being integrated. In particular, beware the splintered culture where, years down the track, employees are still referring to themselves by the old brand name, carrying folders with the old labeling, and organizing exclusive social events with the old crew. In a global professional services firm, for example, growth had been fueled by numerous acquisitions over the previous decade. There had been little integration planning over that period, and so a set of resistant subcultures emerged. These subcultures blocked communication channels and initiatives to align products, services and marketing. To create a common culture so late in the integration process required a new leadership team and a long-term communication strategy to establish a common brand.

Effective M&A communication

Given these challenges, it is essential to keep the following points in mind when planning and managing communication during an M&A. Start with a sound strategy. Getting agreement across the businesses on the three fundamental components of the communication strategy is a critical first step. (See Exhibit 1.)

1. Discovery: the change agenda. Different types of deals drive very different messages about the scope, content and impact of change. Be very clear with employees when talking about likely outcomes and possible scenarios. A common pitfall is for the acquirer to communicate to employees early in the deal that they intend a “merger of equals” so as not to upset employees in the acquired organization. Before long, however, as systems and processes are overhauled, those employees realize they have been fed a “party line.” Leaders lose credibility and productivity slows. This classic mistake was made when a large financial services firm acquired one of its competitors. In initial communications, employees of the target company were told by leaders of the acquiring company that they would “look at the best processes.” For reasons of expediency, however, the acquirer’s processes were pushed onto the target. Employee “pulse checks” at that stage reflected serious distrust of leaders, and this in turn made new contract negotiations difficult. The acquiring business had also lost the opportunity to consider new and better ways to do things. In developing a change agenda for the communication strategy, be clear and straight about decisions from the executive and integration teams concerning the major parameters of the deal, such as:

  • Is this a merger, acquisition, joint venture or divestiture? Communicate early on the anticipated level of integration and assimilation and what that will mean for employees.
  • Will leadership be changed or kept intact?
  • Which systems, policies and processes will change?
  • What should employees say to customers, vendors and other publics?

Certain deals, such as private equity, are driven purely for investment purposes and present few, if any, integration challenges. This is particularly true if a “bolt on” strategy is intended. In such cases, communication planning can be fairly straightforward, with messages of “business as usual” to help employees move quickly through their initial concerns and questions. At the other end of the continuum, when full integration is intended to achieve synergies, communication planning requires far more intricate analysis before launch.

2. Delivery: messages and implementation. Understand how the change will affect and influence each stakeholder group. While every employee, regardless of level or role, will be concerned about “What’s in it for me?” each audience will have additional key issues, for example:

  • Employees: Does this change my employment deal?
  • Managers: What should I say to my team? What support tools will I have?
  • Executives: How do we change behavior? Is there evidence of success?
  • Unions: How will we save jobs? Protect benefits?

Anticipate the key issues for each stakeholder group. Be clear on where resistance is likely to emerge, and plan communication to help employees with their personal transitions. This investment in communication can pay off in significantly higher levels of employee engagement.

Exhibit 1 Establish a sound communication strategy

3. Assessment: measure and reinforce. Communication during an M&A is not a one-time event. It requires constant attention and reinforcement to promote a sense of progression. When employees are anxious, they are less able to absorb initial messages, so repetition is critical. Also, key messages must change as decisions are made and integration proceeds. An efficient way to evaluate the effectiveness of current communication and assess what more is needed is to conduct regular “pulse checks,” which are short, random interviews or surveys across the business to monitor progress. One large, diverse organization that sought to grow its broking operations through acquisition did a particularly good job of communicating messages to each part of the target organization, and this had a measurable impact on the retention of mission-critical employees. The messages were honest about the long-term business strategy that would make some units and functions redundant, and respected the individuals affected by the change. Employees in the broking arm, whom the company wanted to retain, watched carefully how their colleagues in other parts of the business were treated. The acquirer achieved a very successful initial integration with high rates of retention in critical areas. In postintegration pulse checks, employees across both organizations gave the company high marks regarding the quality and effectiveness of the communication. Communicate in four dimensions. Effective communication requires more than just telling the story about the deal. Mercer’s LILITM model articulates four dimensions of communication that summarize what it takes to build employee engagement during large-scale change such as an M&A. (See Exhibit 2.)

  • Listen – Identify each stakeholder group, and pay attention to what each group thinks and feels. Establish two-way communication channels, and encourage supervisors to invite dialogue. Later in the process, conduct formal pulse checks. Listening is not optional. If you fail to listen, you fail to engage.
  • Inform – Provide audiences with the information they need to understand the business case for change and the behaviors that will be successful in the new environment. Be transparent – share relevant facts as soon as possible. Present the range of possible outcomes to build resilience during change, localize and personalize messages, report progress and give evidence of wins.
  • Lead – Leaders from the top down are role models for the new organization. Their behaviors will shape the new culture. They should be equipped to communicate a consistent story and to execute the change actively and visibly. Rewards should be adjusted to drive the right behaviors.
  • Involve – While the steering committee and transition team will have the most involvement in leading integration, other employees can also be tapped to assist. Consider identifying and equipping a broader network of people who can influence others as change advocates. Find ways to solicit and harness frontline knowledge and expertise.
Exhibit 2 Communication should be multidimensional

Supervisors are key to building engagement during an M&A

Supervisors are the most powerful communication system during an M&A if they:

  • Believe in the strategy and tell the same story
  • Tell the truth, and tell it as soon as possible
  • Localize and personalize messages
  • Invite dialogue, listen openly and respond quickly
  • Model the right behaviors and actively help to execute the change
  • Manage performance

Equip supervisors to carry the torch. The role of supervisors is critical to a successful integration. Employees will look to supervisors, as their most trusted source of information, for the “real story.” Give supervisors the information and other tools they need to become opinion leaders who are knowledgeable about the process, able to articulate what is happening and why, and confident in dealing with the tough questions. Their constructive influence can accelerate employee engagement. Similarly, supervisors need to take action to correct or eliminate dysfunctional behavior and address noncompliance and nonperformance.

Closely link communication to the unfolding deal phases. As the deal progresses, communication challenges shift. Each phase includes distinct deal-related activities and goals with unique communication needs and challenges. Exhibit 3 shows how communication tactics should be linked to each phase

Planning the deal – Prior to announcement of the deal, information typically cannot be shared with those outside the dedicated M&A project team and senior management. It is a myth, however, that communication planning must wait. Information about the culture of the target organization(s) is publicly available and easily accessible from blogs, websites, the media, charitable activities, industry awards, court records and annual reports. The communication team should begin identifying issues and stakeholder groups and formulating potential messages to get a start on Day One communication planning

Doing the deal – Doing the deal includes conducting due diligence, preparing for Day One and planning for the integration. Due diligence is a fast-paced, complex period. If negotiations stall, communication must still continue through the silent periods, if only to tell employees when you might next be able to communicate. For the final agreement, try to negotiate access to leaders and a set of communication principles, such as sign-off procedures and a promise to coordinate internal communication. The communication plan should include an hour-by-hour schedule for Day One, as well as a Week One plan. Day One events are symbolic. Some of the critical communication issues that need attention in this phase include:

  • Who will be deployed to which sites and populations to deliver face-to-face presentations?
  • Who will deal with major customers?
  • What should be said?
  • What special programs will be initiated (for example, tactics for retaining critical talent)?
  • How should rumors be handled?
Exhibit 3 Link communication to phases of the M&A deal

To build employee trust, it is important to prepare consistent key messages and to deploy leaders for faceto-face discussions with employees.

Dealing with the aftermath – It is crucial to keep up momentum after the deal closes. Post-deal planning should include both immediate and longer-term integration needs. Organizations will sometimes stop communicating once the deal is done; this creates an information vacuum and sets the stage for a splintered culture. Communication related to the integration of cultures and the changes to leadership, systems, structures and processes must be delivered progressively as decisions unfold. Engaging employees in an ongoing dialogue during the integration can provide valuable clues about whether the hoped-for synergies are being achieved and, if not, ideas for possible solutions.

Cut through the clutter to what people really want to hear. Whether the employee is in the executive suite, a call center, a factory or a sales office, the Exhibit 3 Link communication to phases of the M&A deal Pre-close Day 1 and transition period Integration period n Communicate during the lull n Establish communication channels n Increase awareness of the business context n Interview the management team n Conduct communication audit n Conduct cultural assessment n Engage in executive/board visioning retreat n Identify natural leaders and “owners” of best practices n Develop communication strategy and cultural integration plan n Articulate the business case for the merger n Maintain focus on productivity and customers n Help leaders to be effective spokespeople n Hold employee meetings n Provide training and talking points for supervisors n Identify internal champions and involve them quickly n Implement communication strategy and cultural integration plan n Communicate pay and benefit changes n Provide realistic integration timelines n Update regularly on progress n Identify, encourage and reward behaviors required for success n Create ways for employees to contribute meaningfully to the change effort n Measure communication success and modify strategy 10 Mastering M&A communication: Helping employees to deal with the deal primary question for every stakeholder during an M&A is the same:
How will this affect me? Change is always personal. While people certainly need to understand the big picture – where the organization is headed and why – they will be far more interested in questions such as: Will I have a job? How will my work change? Will I report to someone new? Move as quickly as possible from the general story to the personal story – the employee impact. Clarify the new employment deal and answer employee questions such as: Will I be better or worse off? How will my contributions be measured? Will my benefits change? How will I be rewarded?


Business leaders today acknowledge that M&A efforts of the past have suffered from insufficient attention to the people side of the deal, and they are making a concerted effort to better address these issues. Effective communication is a powerful tool for supporting and accelerating organizational change, including mergers, acquisitions and other business transactions. How an organization helps people deal with change directly drives business outcomes. The investment of time, energy and resources in communication not only wins the hearts and minds of employees but inspires greater productivity with a direct and immediate impact on the bottom line.

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