Here are two alarming statistics: More than 60 percent of all business mergers fail to achieve their financial goals, and 20 percent of them actually reduce the value of the merged company, according to Paul Glover, a FastCompany.com blogger.
This is startling in a climate where mergers and acquisitions are on the rise. The recession prompted many executives to consider M&A options for unloading troubled assets. As the economy recovers, executives of many other, more successful companies are exploring similar maneuvers — whether to exit the business, facilitate growth or expand a firm's geographical footprint.
We all know the definition of insanity is doing the same thing over and over and expecting different results. What must companies do differently to make mergers or acquisitions successful?
In the 20-plus years that I've worked with private equity firms, consultants and business executives, I've seen M&As from just about every perspective. If there's one thing that stands out, it's that proper communications can produce much more successful outcomes. Here are five keys to successful M&A communications:
* It's critical that every M&A incorporate a well-planned strategy for communications, with narratives spelled out far in advance. Many companies wait until they have all the details ironed out before they consider how to communicate them. But you know your story, or at least most of it, at the time you design your acquisition strategy. Get the majority of your messaging worked out upfront, and fill in the details as you have them.
* Be sure your communications strategy extends beyond just the transaction itself. Your goal should be much larger than to merely provide details about the deal. Instead, share your vision for the future. Emphasize your passion about the opportunities the deal presents, because they are the same things your audience cares about.
* Don't make your messaging unnecessarily complex. It's easy to think that all your audiences — employees, customers, suppliers, the community — care about something different. But they don't. They all care about the same thing. Themselves! Everyone wants to know, first and foremost, how the transaction will affect them. Create an emotional connection between your company and your constituents by taking a page from the consumer playbook. Make your message quick, make it relevant and make it memorable.
* Be sure to tell your own story. If you don't, your competitors will be more than happy to tell their version of it for you. Use the press wisely for getting the word out. But remember, the media's agenda is to provide the news, not necessarily to broadcast your key message points. Take advantage of other methods of generating your own content. Your company's website, social media and outbound e-marketing are all great tools for getting your story to your audience quickly.
* Finally, communicate often. Be as open as you possibly can with your audience, but remember, while you can never over-communicate, you can over-inform. Make sure you open two- way channels of interaction to give your audience the means of providing feedback. This helps ensure you are giving them the information they want and need.
By giving your communications strategy as much emphasis as your transaction strategy, you give yourself the best chances for success in every M&A deal. These transactions provide perfect, often rare, opportunities for telling the story of your company, your core values and your vision for the future.
With proper planning and guidance, you can achieve a more successful outcome than statistics would indicate and secure the stability and legacy of your firm long into the future.
Scheibel is principal owner of strategic marketing communications agency Scheibel Halaska Inc. of Milwaukee.