Your team has identified a strategic transaction that it believes will drive your business forward and enhance shareholder value. You are on the five-yard line from a diligence perspective: You have done the work to identify an initial integration strategy, growth platform, and synergy capture plan, and you have all the internal support you need to justify that this is the right deal, at the right time, for the long-term vision of the business.
But, that doesn’t necessarily mean your shareholders and other stakeholders will agree. To the contrary, they may have their own ideas about what’s best for your business, as well as legitimate concerns about how your future plans will impact their best interests.
Successfully navigating and managing these often-competing ideas is critical to winning acceptance from all stakeholders and ensuring the ultimate success of your deal. And a solid, holistic transaction communications plan that considers all stakeholders is essential to your approach.
When building that communication plan, here are a few of the critical audiences and issues that you need to carefully consider:
Your current and future investors.
From the executive suite, it’s easy to see the deal as a means to drive shareholder value. But the Street and your current shareholder base might have different ideas about the best way to achieve the same ends. For example, investors may prefer to see you buy back shares rather than pay a premium and assume the risk involved with a major transaction. If your investors aren’t aligned with your approach, you risk losing their support and could open up yourself for undue volatility, or worst case, shareholder activism. To safeguard against potential negative ramifications, it’s important to:
1. Know your shareholder base. It’s always critical to understand the sentiment of shareholders, especially if M&A activity is on your organization’s horizon. Completing regular perception studies can reveal investors’ candid views around a potential deal, as well as their understanding (or misunderstanding) of the nuances around the transaction. Further, these studies can help you pinpoint any concerns or issues that need to be addressed through strategic messaging, as well as their priorities for capital allocation.
2. Clearly communicate the strategic rationale behind the deal and the expected value of the transaction. With good knowledge of how the Street is feeling, you can then craft messaging around the deal that speaks to concerns while articulating how the transaction aligns with the company’s and its investors’ long-term goals. It’s absolutely essential to clearly articulate the value proposition for the Street up front, and how it fits within the long-term strategy of the business. You must paint a clear picture of how the transaction furthers the company’s growth plan and compliments the overall investment narrative. Illustrate, in as much detail as possible, anticipations for the financial impact and operational synergies the business hopes to achieve as a result of the transaction, and describe the benchmarks you will use to measure and gauge success along the way.
3. Plan your post-deal communications strategy. Some investors who initially have concerns about the deal, or different ideas on the approach you should take, may be willing to wait and see how things pan out. For these investors in particular, ongoing communication is a must. Regularly sharing news of progress and key milestones will keep all investors engaged and serve to maintain and build confidence in the management team’s approach.
4. Be prepared for some turnover. As the saying goes, you can’t please everyone. No matter how well you communicate your strategy, some investors simply won’t agree with your approach. Understanding the inevitable churn in your shareholder base, particularly around transformational transactions that force you to lever up, and proactively building a strategic targeting plan to attract new investors to the story can help you seamlessly manage any turnover that may occur.
Your current and future employees.
The communication of a deal to current and future employees needs to strike a delicate balance. It must maintain consistency with investors messaging, but also be cognizant that the financial benchmarks you provide for the Street can cause angst within the employee base – particularly around synergies. Employees will be most concerned with the stability of their jobs and how their roles might change. And it’s likely that employees on both sides of the deal could have some misgivings about the future. To get in front of these concerns and hedge against losing key people, be sure to:
1. Create an employee-focused communication plan that articulates the purpose of the deal. Just as investors need to understand the strategic rationale behind an acquisition, employees do, too. You’ll want to tailor this messaging to outline new career growth opportunities, benefits, and other employee-specific advantages of the deal.
2. Consider when and how to share the news. How and when you communicate with employees is sometimes as important as what you say. Employees don’t want to feel like the last to know about a deal, so timing is crucial. Internal announcements should be at the forefront of day-of communications, and should focus particularly on addressing the needs of this group, both for the acquiring company and the target company.
3. Identify key personnel and share expectations for their future roles. As with investors, some staff turnover is to be expected with any deal. But if there are players who are crucial to your future success, you’ll want to communicate your vision for them and ensure they are onboard with the organization’s plans.
Media coverage can impact investors’, employees’, customers’, and the general public’s perception of a deal or transaction. Ensuring the media has a solid understanding of the purpose and goals of the deal as well as the intended impact on all stakeholders can help reinforce your story and send the right message. To help create positive media coverage:
1. Consider working with a partner that has established relationships with the financial press. Working with a respected financial communications firm can go a long way in getting your story told correctly by the financial press. It’s critical that your advisors have the capital markets expertise needed to effectively share the value of a transaction with reporters and help push that story out to all the stakeholders you want to reach.
2. Have external commentators lined up to comment on the article. This group should include industry analysts, sell side analysts, and lawyers who can speak to legal issues related to the deal. Making sure these experts are available and willing to contribute can be very helpful to a reporter working on a quick deadline.
3. Always have a quick media fact sheet that is mobile-optimized to send to reporters on demand. The lead bullet points on this sheet should serve as potential headlines. Include the essentials, such as external industry estimates, jpeg files that can be used in stories, and contact information. Make it as easy as possible for reporters to write the story.
Take a holistic approach to your transaction communications with Clermont Partners
Clermont Partners specializes in creating transaction communications plans that consider the sentiment and concerns of all your stakeholders. To learn more about how we can help you plan for the most effective communications pre-, during, and post-deal, contact us today.