Managing mergers and acquisitions

Mergers and acquisitions are back on the business agenda. Businesses that have stockpiled cash during the recession are now looking to do deals and company owners who have held off on an exit during the downturn are now looking for potential buyers.

However, how do you seek a buyer for your business? How do you manage a successful deal process? How do you integrate two business cultures following a merger? And, most importantly, how do you make sure customers are retained?

The answer to each of these questions is effective communications. Seeking a buyer or identifying opportunities is all about raising your profile and communicating your business success. Managing a successful deals process is about effective internal communications that keep staff motivated and focussed. Integrating teams is about communicating a shared goal and clear communication with your staff and customers is vital for maintaining and strengthening client relationships.

In this blog I’ve outlined the four key stages for anyone involved in a merger or acquisition, drawing on my own painful experiences of selling an ambitious, if somewhat misguided enterprise, and also of the more successful people I’ve interviewed.

How do I find a buyer for my business?

The businesses that have survived the recession have built up a sizeable war chest. Current estimates suggest businesses in the UK are currently sitting on a £300bn cash pile. Until now, many businesses have lacked the confidence to invest. However, that confidence is now rising and businesses are beginning to use that money to deliver growth through acquisition.

On the flip side, many business owners who had planned to seek an exit pre-2008, decided that taking a lump sum and sitting on one per cent interest wasn’t exactly an attractive option so they stayed put and grew. That has now been achieved and they are now seeking an exit.

All this spells opportunity. But how do you make sure businesses and dealmakers know you have the potential to make acquisitions or seek merger partners?

Put simply, it’s all about PR. Of those I’ve spoken to, the general rule of thumb is that you need to be working hard to promote your business a year before you actually seek a deal. Your public image needs to be one of a successful and growing business – it’s all about raising your stock and attracting suitors.

This is achieved through a variety of channels, but what it boils down to is communicating what your business does, the success and growth it is delivering, the innovation and expertise it can offer and, most importantly, the potential for future growth.

How do I manage mergers and acquisitions?

You’ve raised your profile, you’ve attracted a suitor and the courtship has gone well. The next step is doing the deal.

The key lesson I’ve learnt from my experience of selling a business and from fellow business leaders is that deals are disruptive, hugely time-consuming and can have a devastating impact on staff morale if not managed carefully.

At a round table debate I chaired with a number of businesses who’d tackled deals, each of the leaders agreed their business had seen a drop in performance during the process because they had been forced to take their eye off their day job.

They also agreed a constant procession of people in suits had a significant impact on staff who feared what the future had in store.

When I was part of a team selling a business, we kept everything under wraps and hidden from staff. It was a delicate process and a few unsettling issues emerged during the due diligence and we decided nothing would be revealed until the deal was done. With hindsight, I now realise this was a mistake. Inevitably, rumours ran riot about what was going on behind closed doors and staff morale plummeted.

As always, honesty is the best policy. Your people are the driving force behind the business and open and honest communication with them about the deal is the easiest way to allay fears and highlight the benefits it will bring.

This can be achieved through a number of channels, but the best way is regular face to face briefings where you update staff on progress, talk about timescales for the deal and also start introducing ideas about how the business will move forward after the deal.

It’s also an ideal opportunity to seek fresh ideas and thinking from your workforce about how the business makes the most of the deal and how it can be used to offer more to customers. By involving your staff in a major moment for the business you build engagement, loyalty and, above all, trust.

How do I best promote a deal and engage customers?

A deal is a great opportunity to promote your business and attract new customers. However, it’s also an important time to reassure your existing clients.

A new deal is an attractive story for most media outlets and is a great opportunity to show how it will help the economy – new jobs, more expertise, greater career prospects and fresh opportunities for local suppliers – while also demonstrating how it is improving your offer.

Northern Lights chief executive Victoria Tomlinson’s 5 inside secrets for successful mergers and acquisitions says the customer must be at the heart of all communications and it’s important to make sure you also communicate individually with them to demonstrate how they will also benefit.

The same is also true for your staff. You need to show them how it will improve the business and inject the same passion you have for the future so they can take that message out to the world.

How do I integrate two business cultures following a deal?

The final challenge in any deal is integrating two different cultures. This is perhaps the biggest challenge, but can be overcome by maintaining momentum and ensuring everyone in the business shares the same vision.

The merger was all part of a strategic plan for your business and any communications should mirror that plan. Whether you are using staff briefings, newsletters, memos or video updates, each communication should reinforce the vision and clearly demonstrate how everyone can work together to hit those targets.

Staff should be involved in every level of the development of the strategic plan. By making sure everyone has a say in the integration and strategy, both teams will quickly buy in to a new shared vision.

When I did the deal, I briefed the whole team and then spoke to everyone individually about their role in the company and how they wanted their career to progress in it. The result was that everyone shared my passion for the business and ultimately appreciated the extra expertise we now had in the team as it meant further opportunities for everyone.

Victoria spoke about the need for pace following a deal and this is a key in communications. All too often businesses quickly get bogged down in politics between cultures, but by constantly driving the team towards the goals with effective communications, cultural differences can quickly become a thing of the past.

Every deal is going to have its own challenges and obstacles and every business leader will overcome them in their own way, but effective communication will be the key. I’ve shared my own experiences of doing a deal and I’d be interested to hear your own experiences of mergers and acquisitions and what you found the hardest?