Mergers and acquisitions (M&As) can cause instability and disruption for a business for obvious reasons. Yet, when handled correctly, they have the potential to be an overwhelmingly positive change for all involved.

Read on to find out why many mergers and acquisitions fail, what the common pitfalls are and how you can introduce successful change in your business.

Why do so many mergers & acquisitions fail?

Culture clash

Merging distinctly different working cultures – or even competitors – can be a recipe for disaster without the right measures in place. For example, how can you expect the team behind a small, buzzy start-up to gel with the bureaucratic lifestyle of a large multinational?

Treating people like resources, not humans

Failing to understand and empathise with your employees as individuals –and expecting them to accept and adapt to changes without question – is a mistake many companies make during merger and acquisition processes.

Too many assumptions

Expecting everything to be harmonious and not putting in place the steps needed to facilitate a considerable change can often lead to internal conflict.

Delays

Mergers and acquisitions that take longer than planned can quickly cause disgruntled and disillusioned employees. If it drags on for too long, you may find employees from both sides jumping ship due to uncertainty and job insecurity.

Ineffective integration strategy

Too many businesses merge with or acquire another business without implementing an effective integration strategy.

It’s a significant change to all involved, so it’s not enough to simply expect it to land and hope for the best. Taking a laissez-faire approach to merging companies will almost certainly impact your business negatively.

What are the risks and pitfalls of mishandled mergers & acquisitions?

Loss of engagement

One significant danger a mishandled merger or acquisition can cause is a drop in employee engagement. A lack of enthusiasm can quickly lead to lower productivity, more absences, higher turnover and a negative effect on your company’s relationships with customers.

Impact on employer brand

To recruit and retain the right people, your company needs a good reputation as an employer. It only takes a couple of negative Glassdoor reviews to turn prospective employees off pursuing a role within your business, so failing to handle a merger or acquisition sensitively can have a long-term effect on your ability to attract future talent.

Damage to brand reputation

Unhappy employees can impact your brand’s reputation among customers. Whether it’s a business-to-business (B2B) or business-to-consumer (B2C) brand, your customers need to buy into it.

Bad news can spread quickly. So, if customers hear of employee unrest, it can change their perception of your organisation, have a devastating impact on your reputation and ultimately lead to a loss of business.

So, with the pitfalls in mind, how can you prepare for a successful merger or acquisition?

How to get your communications strategy right – tips for success

Plan change communications

The first, most crucial step in planning a successful merger or acquisition is to have a change communication strategy in place.

Spend time preparing for the cultural and emotional transition. Talk to your employees, discover their fears and tackle them together. Keeping employees involved from the outset will ensure healthy levels of engagement and buy-in, so assemble a team of employees from different departments in both businesses and use them as a sounding board for ideas and approaches. Bring them into the heart of the culture change, get their buy-in and act on their suggestions.

Identify what currently works well about how you communicate as an organisation, and what doesn’t? What’s the best way of reassuring people their jobs are safe? And beyond that, how can you make them excited about the change?

Your chosen group will become ambassadors for the change and spread positive news across their peers, as well as extracting insightful information from colleagues that can inform how you navigate your change journey. They should canvass opinion to feed back what employees really want to know – from the broader scope of the change to the practicalities of post-change working life.

Essentially, most employees will be wondering “what’s in it for me?”. Therefore, your change communication strategy should focus on how the merger or acquisition can positively impact individuals and their working life, career goals or job satisfaction.

Effective change strategies centre on listening to employees, so take this opportunity to organise focus groups, surveys and one-to-ones with line managers to find out what employees love about their jobs and what they’d happily leave behind. Find out what their frustrations are, then see how the change could alleviate them. Equally, ask what their dream working scenario looks like, and explore how you could make this happen.

As the Bridges’ Change Model explains, managing change on any scale involves helping people through three main phases:

1. Ending, Losing, Letting Go: Letting go of the old ways and the old identity people had

2. The Neutral Zone: The psychological realignments that need to happen as people start to adjust

3. The New Beginning: When employees develop a new identity and a sense of purpose aligned with the change.

Transitions unearth a lot of anxiety for employees: whether that’s job security or losing aspects of work they enjoy.

Listening to these concerns is key. Leaders and communicators need to sit down with individual employees, find out how they are feeling, take note and use different coaching techniques to make moving through each stage of the transition easier.

· Establish clear responsibilities

If no one is steering the communication agenda for your company’s merger or acquisition, it can lead to buck-passing and blame culture.

With this in mind, it’s essential to establish whose responsibility it is to create and drive the communication strategy, whether that’s an in-house communications manager or an external agency.

If you underestimate the importance of allocating responsibility for communications early on, you’re likely to pay the price later in the form of low morale, conflict and resignations.

Use the right channels and tools

Employee apps and social platforms like Yammer – as well as your company intranet and newsletter – are all excellent tools to relay information to your teams. However, there’s no substitute for face-to-face communication when it comes to merging or acquiring businesses.

While these tools should undoubtedly form part of an effective change communication plan, it’s essential to make sure your leaders are in a position to keep teams well-informed and engaged throughout the process.

· Put people first and have empathy

A priority in preparing a merger or acquisition must be to put your employees at the heart of your communication strategy.

Remember, your team consists of real people with mortgages, families, emotional attachments and work loyalties. Announcing a sudden merger or acquisition can leave colleagues feeling neglected or betrayed.

Crucially, try to see the change from their perspective, then mitigate any fears or worries they may be experiencing through clear and compassionate communication.

Be conscious of your employees’ mental wellbeing and establish or enhance measures to prevent or alleviate stress or anxiety they may feel as a result of the change.

· Take charge of culture

Whether you’re merging two cultures together or undergoing a cultural change to realise a new vision, you must manage the process from beginning to end.

It’s not a quick or easy process. Rather, it’s a large-scale undertaking that requires research, planning, collaboration, strategic and creative approaches, commitment and time.

Ask employees on all sides what defines the culture, what’s important to them and what can realistically change to make a cultural transition successful. And make sure you act on their ideas and suggestions.

Not only do you become more aware of your company’s culture, but you give employees a stake in the transition. Without their buy-in, they will become resistant to change, lose their trust in you and contribute to negative behaviour that will make your plan unsuccessful.

The acquisition of Nest by Google in 2014 is an example of a culture clash that could have been managed better.

In 2014, Google acquired Nest for $3.2 billion (a connected-home devices start-up founded by Apple employees Tony Fadell and Matt Rogers).

Google wanted to become a leader in software building, which is why its secondary aim was to buy Fadell - co-creator of the iPod. Google hoped to bring some of Apple’s hardware expertise to the table. Fadell would focus on the product and vision for Nest while Google would give support through its vast resource pool.

What went wrong?

Culturally Nest and Google were like chalk and cheese. Nest had a top-down culture with only one leader; Google had always been bottom-up. Nest was rigid and dictatorial; Google was more open and collaborative.

Google failed to acknowledge how combining two very different mentalities would affect the results of the change and Fadell’s integration into the Company. As you can imagine, Fadell found it far from easy. He had built Nest around his singular vision, but working under Google, he was forced to break into a new and alien way of working.

Employees at Google found working with Fadell equally difficult. Vox cited that Google employees had been circulating tactless memes about the Nest founder.

Ultimately, Google’s vision for the merger failed. Fadell ended up leaving Nest in June 2016. Rogers made his exit in 2018.

· Compare and contrast

Different businesses have different approaches to communications. Therefore, employees within each company will inevitably have varying expectations of how changes will and should be relayed to them.

For example, smaller businesses might rely on personal, face-to-face communication. At the same time, colleagues in larger organisations may be used to important news being delivered more impersonally, en masse.

Rightly, one size doesn’t fit all. If you decide on universal methods of communicating with individuals across multiple companies, you’ll likely offend, isolate or upset people by default.

Assess how each business currently communicates to its employees: what do they do the same, and what do they do differently?

Comparing and contrasting different strategies will give you a clear picture of the existing landscape and inform how you individualise your approach to communication for each team and business.

Most importantly, treat everyone equally, even if communication methods differ, to prevent an “us and them” mentality.

· Listen to colleagues and retain top talent

To prevent top talent from deserting your company amid the upheaval a merger or acquisition can cause, you need to implement critical measures to ensure employees embark on the change journey with you.

Treat people with respect. Speak to them face-to-face and ensure they feel valued, not only as an employee but as an essential part of the company’s future. Discuss their career aspirations and suggest ways the change could benefit their goals, through progression, upskilling or expanding their network.

Keep colleagues involved in each stage of the change process. Offer them a role on the change team, assure them their opinion is valuable by regularly consulting with them or invite them to lead employee focus groups. If they feel invested in the journey, they will become brand ambassadors for the change and positively influence their peers.

How to communicate after a merger or acquisition

Your change communications strategy shouldn’t end when the merger or acquisition is complete. Instead, consider how you’ll communicate as a merged business in future, and how to unite differing communication policies now you’re a single entity.

Merging with or acquiring another business can be a fantastic opportunity to establish what works and leave behind anything that doesn’t. See the change as a chance to grow your communications as a business and adopt newer, better habits to keep all your employees engaged, enthused and invested in their career within your company.

If you’re not sure where to get started planning a strategy to communicate significant change in your organisation, download our change communications canvas for useful advice and guidance.

Alternatively, if you don’t have the resources in-house to plan and implement an effective communication strategy ahead of a merger or acquisition, speak to the Enthuse team to see how we could help. Contact us on 07812 343310 or email hello@enthuse-comms.co.uk

Mergers & Acquisitions – what are the pitfalls and how does communications contribute to success?