Capturing the personnel and personal side of business transitions: Should M&As become M&A+Ts (Mergers&Acquisitions+Transition)?

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From the regulator’s approval to the street’s expectations, there’s a belief that everything related to a merger and acquisition is seamless. After the deal’s been inked and announced, you get bigger and better, and it’s officially done. But, there’s a lot more to it than that. The missing context from the M&A is T – for Transition  – and it cannot be underplayed.  The analysts know more about the heavy lifting that’s already been in play for months. They’re watching for signs internally that everything is going well. What is the chatter on social media?   Are there any editorials in the local papers?  Have customers been vocal for or against the transaction, or is it all quiet?  For some business transactions, the voice of the Union is also quite powerful.

When companies head into a transition, it’s not just the leaders who have been involved in the decision making who are affected. From employees’ perspectives, they’ve just been tossed into uncertainty that may not come with clear answers. There’s a particular savvy required to navigate a transformation and realize the intended growth. It’s all tied to the tone set from the top. Leaders of both organizations have to share consistently and accurately. They also need to be intuitive and show empathy. They need their teams to appreciate and buy into the work that’s gone into developing the way forward while rolling up their sleeves to transform the business. Entering into this without forethought and planning is a recipe for disaster. 

Start with thoughtful and authentic communications

Communications give an organization its personality. During a significant transformation, they are also the key to success. It starts by being aware of the repercussions and difficulties that the organizations will face during a transition, being laser-focused on the potential it inspires, and simultaneously being able to look at things from both external and internal perspectives. If you can’t manage that, it’s a definite sign that the transition may be in for a rocky ride.

Don’t underestimate how much you need to focus on employees

Even before the deal is announced, you need to have a plan in place for employees to maintain their focus, expertise, and commitment to customers. You also need their knowledge.  Have the organization’s leadership team get in front of them the very day the deal is announced and follow up regularly with townhalls – either onsite (with appreciation that this part is challenging during the pandemic) or virtual. Be inclusive and considerate that each organization will be used to “their” mode of leadership communications. If a Union is involved, it’s a best practice to meet as early as practical with business leaders of these organizations – their membership will be coming to them for answers.  Be sure that they have the materials to be responsive.  If you can’t come out of the gate here strong, you will be challenged to earn respect and build confidence. It would help if you also had a place where employees could see everything about the transformation in writing. 

Information that’s shared responsibly and honestly will offer some of the reassurance that employees are seeking for themselves and their customers. 

Put minds at ease

Employees, regulators, local government, and customers are going to be watching the transformation closely. When they feel valued, not vulnerable, you build trust. Paramount for employees is getting some sense of stability. They want to know if they are going to have a job after everything has transitioned. 

Be honest.

Sometimes acquisitions do require synergies to make them work. In the early days, you may not have all of the information. Start with a commitment to share what you can early on and follow through with a time when you’ll be able to tell them the rest. As I’ve learned, they also want to know about these six basics related to stability:

1. Communicating with Key Stakeholders – A transaction will always require some type of government approval, whether it be local, state, provincial, or federal.  Many stakeholders such as Unions, Chambers of Commerce, newspapers, and customers will have an ability, especially through social media, to raise their voices. Identify these groups before any initial announcements are made and create a comprehensive communications strategy that addresses their interests. It needs to start from the first press release describing the components of the transaction and include face to face sessions to introduce the new parties in the go-forward plan.  It will not be a one and done kind of thing. The communications plan will need to continue to deliver key messages throughout the approval cycle. For instance, looking out for opinion pieces and social media commentary about the deal is a must. Everything has to be monitored and evaluated to determine appropriate responses.  Never underestimate the power of these influential groups in the outcome.
2. Organizational Change – Employees will want to know what is changing in their day-to-day lives, as the new organization is announced and starts to take shape. Inevitably, from day one, there can be changes in the structure and reporting relationships that people want to know about and understand – especially if any of these transitions will affect customers. Most times, the message coming from senior leadership is that they will be working with the same great people, providing the same great products, and offering the same great, high-quality services to customers. They may have a new boss because of transitions within senior leadership roles, and that will make some feel immediately vulnerable while others heave a sigh of relief. If you want front-line workers to remain diligent in delivering a seamless experience for customers, you cannot ignore the fact that from this point forward, you need to know what employees are thinking and worrying about. And you need to keep talking to them. A best practice would be to set a regular “town hall” meeting for transition updates and other more specific sessions to tackle detailed mechanics.  Ensure that any Unions involved are kept well informed too.  Information vacuums will sink your efforts and leave the organization exposed to a knowledge drain. Be aware that as much as you may want to keep them on – or not – you will see many people self-selecting and checking out of the organization as things begin to unfold.
3. Salary and Benefits – Get a crisp statement ready right away. Tell employees what’s happening. If there’s a review, let them know when it will be done. If compensation is going to be unchanged, say that. Benefits are part of their economy. Until things are settled, employees will scrutinize everything about the transition relative to their interests. Tell them if their insurance at work will remain the same or if more analysis will be happening. They will be worried about their pensions or other savings programs they have at work, too, so don’t forget to address these to help alleviate some stress. Create an easy way for people to ask questions and get those answers going. It will be one of the most significant areas of focus during the entire transformation. Don’t bungle it with overcomplications. Salary and benefits cause the most anxiety and often demand the most attention during transition. Remember that as much as you may say things are “substantially the same in the aggregate” for your employees, this is not necessarily the case for all. 
4. Culture – Who are we? What’s going to stay the same? What will be different? What do you call this? What’s your approach to customers? You’re bringing two ideologies together. Sometimes, the transformation takes the best from each organization and creates a new path. Sometimes that doesn’t happen, and one party will feel that they must assimilate. There will be a lot of questions. People want to belong to something. Now they feel vulnerable. Things can get uncomfortable. And what about the senior leadership team that plays a large part in establishing culture? 
5. Branding – This can be delicate. Often, there may be a commitment to retain the acquisition’s brand for some time as a way to preserve employee and community commitment. That means not changing operating names and logos for a while. In my experience, the best integrations were the ones where there was a plan ready to put in place on day one, to demonstrate that things were different. Ripping the bandage off and starting with new building signage, uniforms, and customer-facing materials should be refreshed immediately. It will help standardize things. Above all, don’t miss opportunities to get this right by adopting some best practices from the acquired company. Embracing some of the things they did better than you will help make their employees feel valued. 
6. Technology – Having a single platform or system is hugely important and makes all the difference in how the new company determines its operational decisions in the future. The new company needs to be nimble. Workarounds on legacy systems can become crippling, especially as your workforce evolves. In a couple of years, you don’t want to be stuck in a crisis having to unravel the mysteries of systems only a handful of people know. Change IVR, voicemail greetings, and email on the first day. Get to one harmonized platform for everything as quickly as possible. 

There’s been a lot written about why M&As failed. These cases all happened before the pandemic. Covid-19 has created a situation that will inevitably see a great deal of transformation happening over the next few years as the entire world tries to recover. Many industries will feel upheaval. It will take courage and patience to sort things out. More investment in empathy and understanding will be necessary because of the psychological effect that the pandemic has on people. Giving time and attention to the transition component of M&As in a post-pandemic world will help address additional layers of complexity.