Bad communication can kill the deal

By Helena Nordman-Knutsson, Hallvarsson & Halvarsson

"Communication is sometimes seen as something generic – it occurs naturally and can be handled by any other subject specialist, with equally good results. But this isn’t true!" says Helena Nordman-Knutson, Executive Director, Capital Markets, at our sister agency Hallvarsson & Halvarsson.

We couldn’t agree more, and would just like to add that utilising and planning for your digital communications is just as important. So, we’ve translated her debate article from Swedish, as it appeared on Realtid.se on the 4th of February 2019:

According to Mergermarket statistics, a total of 390 M&A transactions were carried out in Sweden last year, at a combined value of EUR 39.5 billion¹. Despite general market turmoil, we are convinced that companies will continue to execute their acquisition strategies.

Companies engaged in transaction processes need to understand how to create the conditions for a reasonable valuation

A successful acquisition requires good groundwork. Behind every successful acquisition, there is a clear acquisition strategy, a solid acquisition analysis, and, above all, a good integration strategy. We believe that communication is another success factor. At the same time, it is communication that frequently falls by the wayside.

Communication is sometimes seen as something generic – it occurs naturally and can be handled by any other subject specialist with equally good results. But this isn’t true! As a communications advisor, I speak, of course, from my own perspective. Nevertheless, companies engaged in a transaction require knowledge on how to chisel messages, set the desired tone, create the conditions for a reasonable valuation, and minimise the gap between the market perspective and the company's desired position. And, above all, it needs to get employees on board with the change.

Communication runs straight through acquisitions and divestments like a highway

We believe that corporate communication capacity needs to be integrated within the transaction process if the values ​​that the acquisition is expected to generate are to be reached. Communication runs straight through acquisitions and divestments like a highway - without it, acquisition processes can slow down or become increasingly tangled and poor communication capacity can and will impact business operations.

The starting point should always be a preventive risk analysis in order to map and neutralize communication risks. While a process is underway, there is seldom enough competence or resources left to handle communication in its entire complexity, so it should be taken care of and mapped at an earlier stage.

Create accurate and consistent messaging

Companies secure essential legal and financial expertise early on in the process. When it comes to communication skills, these are frequently first sought after during the transaction stage. However, that capacity and knowledge is already needed during the initial, strategic phase. The company needs a way to handle information leaks, crisis communication capabilities, a strategic timetable for publication, and, finally, it needs accurate and consistent messaging for different target groups. Communication that is shackled by legal and financial jargon does not work when the company is expected to present the acquisition to private investors, the media, community actors, customers, and employees.

Not just “business as usual” for employees

For employees working for the target company, it is not enough that management sticks to a “business as usual” approach following the announcement. They will rarely perceive it as such. In these circumstances, effective communication is required to cover any key issues that might arise. Management may not have all the answers on hand from the beginning, but being present and communicating throughout the adjustment period can do a lot to alleviate the uncertainty.

It’s harder to build confidence among employees who became aware of the ownership change via the media and/or a press release. After the official announcement, employees need regular information about what is happening to understand how the change is related to the company's overall strategy. For the transaction to be successful, it can be just as important to follow up on it as it is to implement the acquisition.

And, once again, a crucial success factor in this integration is spelled "communication".

Helena Nordman-Knutson, Executive Director, Capital Markets, Hallvarsson & Halvarsson

¹ In Europe the number of deals were closer to 7,500 at a value of 146.2 bUSD

Photo by Jason Rosewell on Unsplash