Today, I want to discuss some practical reminders of what everyone in the M&A integration community already knows to be the gospel truth, but often fails to execute as well as intended – communications.
Nearly every study completed on M&A integration effectiveness ranks communications as a mission critical and strategically important requirement. Practical experience consistently demonstrates that companies implementing an effective M&A integration communications strategy report significantly better results than those that do not communicate effectively, specifically in areas such as customer focus, employee commitment, clarity of company direction, speed of decision-making and overall productivity. Additional research on the overall strategic impact of effective organizational communications repeatedly links superior communications and change capabilities with superior financial performance relative to companies rated as less effective communicators.
"M&A communications, like war, must be waged. It's an ongoing campaign, not a one-off event."
Our own research consistently documents the essential but extremely challenging nature of effective communications during M&A integration. Previous blog posts have highlighted these points. (See What's the #1 People Integration Success Factor? and our 5-part series on change management during M&A, beginning with Why Every Acquirer Must Get Good at Change.)
In one prior study consisting of over 200 skilled acquirers, each with multiple completed deals in the preceding five years, 90 percent of respondents ranked communications as the “most important success factor,” yet only 43 percent of these same respondents said their communications were effective.
Research completed for our book, The Complete Guide to Mergers and Acquisitions (Galpin and Herndon, 2006), included 124 executives with direct experience in M&A integration. In that study, we found that the #1 area of integration – cited by 31% of respondents – most needing improvement is “communications.”
Finally, the State of M&A Integration Effectiveness study definitely finds some good news, but once again, shows experienced M&A executives coming up short on communications effectiveness. In fact, there’s a slippery slope we’d like to point out:
- 57 percent report good or outstanding results with communications on the day of initial public announcement.
- 48 percent report good or outstanding results with Day-1 communications, meaning the first day of combined operations and ownership after closing.
- But only 40 percent report good or outstanding results in delivering an ongoing communications process that consistently delivers timely, meaningful communications to all stakeholder groups.
See the problem? Even good practices weren’t sustained to drive the key integration issues and milestones as needed. In fact, this is probably still due to many of the same old challenges first reported way back in the first edition of our book 16 years ago. Communications efforts are often still under-resourced, too slow, start too late, end too early, not well planned, deliver inconsistent or incomplete messages to various stakeholders, and often still fail to adequately involve senior executives in the process. Hmmm, for all of the successes out there, our M&A community still has important work to be done on communications.
Now, we know that you know it’s important, but this is tough stuff. Good M&A communications is not for the faint of heart. In fact, it’s one of the most important priorities for executives. Hopefully the bullets below and thisdownloadable resource, M&A Communications -- Lessons Learned, will help provide some practical, usable reinforcement of these timeless principles for success.
“Communication … is the real work of leadership.” — Nitin Nohria, Dean, Harvard Business School.
“Employees can tolerate an unpleasant certainty far better than a pleasant uncertainty.” — Jeff Hemmer, Energy Industry Executive and Consultant.
“Communications effectiveness and integration effectiveness go hand-in-hand. You can’t communicate effectively if you can’t make timely, effective integration decisions on issues that matter.” — Mark Herndon.
“M&A communications, like war, must be waged. It’s an ongoing campaign, not a one-off event.” — The Complete Guide to M&A: Process Tools to Support M&A Integration at Every Level, Third Edition (Herndon and Galpin, 2014)
“In the absence of leadership, people will listen to whoever speaks.” — Chief of Staff A.J. MacInerney, in the movie The American President (Rob Reiner and Aaron Sorkin, 1995).
And, the most important of all…“You can NEVER over-communicate.” — Jack Prouty, President, The M&A Leadership Council.