M&A Monthly / May 2015 Chairman's Message
By Jim Jeffries, Chairman, M&A Leadership Council
Element 3 in the S3 Guidance Model
Stability – Don’t get so tied up around creating Speed and capturing Synergies that you forget about the need to stabilize the stakeholders (employees, shareholders, customers, vendors, etc.) first. Yes, First. Maybe the most important integration strategy and effort is in having the tools, capabilities and a specific plan for stability. As we often say in many of our seminars, “the most risky day in the life of an M&A is the day we announce the deal, not the day we close it”.
The day the deal is announced is the day your competitors go to war to capture your clients, your targets’ clients, your best people and your target’s best people. It’s a very vulnerable time for your organization. And, while you are celebrating the potential acquisition, everyone in the new organization is worried about, “What will happen to me now”? Performance may rapidly decline as folks begin to meet around the watercooler to discuss their fate and the fate of the company. Your customers are also wondering what will happen to them? Will shipments still arrive on time? Will they still be able to count on you for the products and services they purchase? Should they now consider another vendor?
Yes, the day you announce the deal is a high risk day…….unless you have created a clear strategy to mitigate the risks across all stakeholders. Besides the customary concerns about investor community communications, elevate these other areas for communication tactics:
- Customers – Make sure that the CEO/s or division leaders contact the top customers in person or by phone to explain the day’s announcement and how the deal will affect them. Let them know of your personal interest in their success and how things will continue without a hitch.
- Employees – We often make the mistake of thinking that the employee population will be as excited about the deal as management. Hardly. Make sure that you and your counterpart at the target company deliver a direct and personal message to each employee addressing the “me” issues. This is why the Council recently wrote and published the Employee Handbook for Navigating Mergers and Acquisitions. We must address the uncertainty that permeates an organization when the unknown occurs.
- Key talent – Knowing that your key talent and the target company’s key talent are at risk of flight by considering and even pursuing career moves, you need to have a re-recruiting strategy to let them know they are valued and will become an important component of the new and ongoing organization.
S3 Guidance Model – Speed, Synergies and Stability. My final comment in this series might be that M&A value is not created at close. Value is created from significant pre-announce and pre-close planning and then by delivering the deal promises via the S3 Model.
Enjoy today's M&A Monthly,
Jim