So You’ve Announced a Transaction, Now What?

June 16, 2022
By James Bourne and Alexandra Clements

Announcing the signing of a merger or acquisition culminates weeks or months of intense preparation and planning, and announcement day can naturally feel like the finish line. You’ve conducted your media interviews, spoken with your investors and analysts, contacted key customers and met with your employees. Your key stakeholders are now informed of the strategy and feeling positive. Congratulations!

But you are not done yet. In fact, the real work has just begun!

The transition period between signing and close is crucial not just to getting the deal completed, but also to achieving all the benefits promised by the transaction. Deals create uncertainty, however, and uncertainty creates risk. In the absence of effective pre-close communications, shareholders can vote “no,” talent can leave, customers can stop buying and regulators may take a closer look.

Given these risks, we advise our clients to conceive of M&A announcements not as the conclusion of a process, but as the beginning of a months-long campaign to build support from all stakeholders that extends from announcement through close (and beyond). Communicators in the post-signing, pre-close period must focus on articulating the value proposition of the combination during this time to all key stakeholders, while reinforcing a strong sense of purpose and direction independent of the transaction.

Here are five communications principles to apply in the pre-close period:

• Build a solid foundation and understanding: Messaging should be drawn from what has already been publicly disclosed and pivot to what’s exciting and comes next. Equip managers with the tools to communicate, as employees will look to them to understand how to behave in this period of transition, and develop a process for employees and other stakeholders to ask questions.
• Use regular channels and normal body language to show that it’s business as usual: Management needs to show that it’s capable of keeping the business running smoothly while the transaction closing process is underway to avoid disruption. By doing so, you can help motivate, retain and attract new employees, as well as maintain customer and supplier confidence in the company’s ability to execute on its ongoing business.
• Remain an independent competitor (if your merger partner is one), but have a plan for limited and appropriate coordination with the other side: Legally and operationally, both companies are separate entities and should operate as such until deal close. You want your employees to be enthusiastic about the coming combination, but not so much they jump the gun. Communications and coordination should be limited only to what is needed to secure approvals of the transaction. Both sides should work with their legal teams to develop a clear protocol in advance, so everyone understands where coordination is (and is not) appropriate.
• Don’t overemphasize the transaction: The truth is that not every deal closes. Communications should be positioned from strength, so that if the worst happens, and the deal falls apart, the individual entities will be able to make it alone. Each company’s strategy, direction and momentum should be well understood and credible. Communications should show that even while they work together to complete the transaction, both parties to the deal are moving forward with their existing growth plans. Stakeholders should be on a “need-to-know” basis regarding matters related to the transaction, so that you don’t confuse or distract them with more information than they really need.
• Anticipate contingencies through regulatory approval processes: Anything can happen in this period of transition. While it’s impossible to prepare for every possibility, the company and its advisor group should determine the top contingencies throughout this process and develop scenario plans with communications considerations for all stakeholders. This advance planning will help the company think through potential pitfalls and be able to react more quickly and efficiently should the unexpected occur.

Announcing a deal is great, closing a deal is better and achieving the deal’s goals is what you really want. Well-managed communications help secure shareholder approval, keep employees engaged and excited, build customer momentum and position the business as strongly as possible – all leading to a successful deal close.