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Updated Mar 28, 2023

How to Handle Internal Communications During a Merger

M&A deals are on the rise. How should entrepreneurs and business leaders prepare their workforce during a merger?

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Julie Thompson, Senior Writer & Expert on Business Operations
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Table of Contents

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Failure to communicate effectively during a merger or acquisition can quickly result in rumors. To prevent employee strikes and a toxic work culture, it’s vital to be transparent as early as possible.

Internal acceptance of the merger or acquisition can help your company move forward while maintaining its brand reputation. While the combined company culture may take a temporary hit as you navigate uncharted waters, how you communicate can make a significant difference in your workforce’s well-being and purpose.

Mergers and acquisitions (M&As) are becoming frequent, especially in the tech, media, transportation and healthcare sectors. It’s essential for entrepreneurs, business owners and C-suite executives to understand how to adapt to the changes through transparent communication and culture integration, all while keeping the brand’s reputation intact.

How to internally announce mergers and acquisitions 

If you are getting ready or currently going through a merger or acquisition, it’s understandable to have questions about how to communicate this change to your employees. While your communication may be unique to your workplace culture or the M&A process, being transparent through internal company letters is crucial to success. Your M&A letter to your staff should follow this format:

1. Announce the merger.

The first part of your letter should be the announcement of the merger or acquisition. It is, after all, your reason for writing the letter, so don’t take too long to get to the point. This section should immediately clarify any confusion, anxiety or rumors surfacing. It should outline the timeline of the merger or acquisition and provide details about both companies, including the steps for moving forward.

2. Describe the reason for the merger.

Explain the “why” behind the merger. What will you achieve in merging with this other company? For instance, maybe you’re looking to increase your customer reach, or perhaps you want to diversify your operations. Whatever the case, share it with your employees so they understand your goals for these changes.

3. Address anticipated questions and concerns.

Naturally, your employees’ first question will be whether they still have their jobs and how their roles will change. Address these issues — even the uncomfortable ones — upfront by describing any immediate changes affecting employees. 

Also, offer reassurance where you can. For example, if their employee benefits will remain the same (or improve), emphasize that. If their jobs are not at stake, communicate that immediately. Write clearly and openly about how the merger will affect their day-to-day operations.

4. Direct further questions and concerns to HR.

Make a note at the end of the letter directing employees to contact your HR person or department with any additional questions or concerns. If you’ve scheduled a meeting to address the merger in person (which you should do), alert them, so they know when to attend and bring questions. You want your employees to feel heard and valued, not left in the dark.

FYIDid you know
HR is pivotal in internal communication regarding mergers and acquisitions. HR departments from both companies must cooperate to create new policies for a blended organization, strategies for employee retention and downsizing, and a relevant, comprehensive employee benefits program.

Why internal communications are important during mergers and acquisitions

Mergers and acquisitions can be a great way to accelerate growth. But when they fail to produce the desired result, a common factor is poor communication, including a lack of information during the pre-merger period and a lack of post-merger cooperation and coordination.

When a transaction is announced, employees often speculate, and many companies become rumor mills. The first thought for many employees is, “Will I still have a job when all this is over?” This can cause panic if they aren’t getting the answers they need.

Some rumors are relatively harmless, but other stories or media leaks can damage the business and cause valuable employees to leave the company. Uncertainty due to poor communication will not only lead to time-wasting rumors but also impair employee engagement, reduce motivation and work quality, and ultimately impact the company’s bottom line.

It’s essential to keep your employees in the loop by communicating openly and effectively. Here are four reasons why you should control the flow of information and develop a thorough employee communications plan before a merger or acquisition.

Employee loyalty and trust are at stake.

How a company communicates during a transaction directly affects its employees’ loyalty and trust. When inconsistencies exist between what a company says and how it acts, employees often lose faith in the organization.

Because employees often feel blindsided when a deal is announced, company leaders and other internal communicators can minimize the negative impact of a merger or acquisition by creating a proactive communications strategy. The communications team should prepare messages for target audiences, develop an announcement timeline, and appoint or apprise company spokespeople. There should also be a contingency plan in place for unexpected events. Employee trust is too costly to lose. [Read related article: Leading With Transparency Promotes Customer Loyalty]

TipBottom line
Be as transparent as possible. Instead of offering light messages during this period, focus on giving answers your employees want to know. They wonder about how this process will affect their work schedules, space in the office, professional values and current work goals.

Your best employees can leave at any moment.

Because people at both companies are concerned about their job security and responsibilities, employees want to know what changes are coming and when. Legal regulations can make it difficult for executives to be transparent. Still, when management haphazardly says that “nothing will change” to keep employees motivated, trust will be damaged when things do, in fact, change.

If employees are kept in the dark or lied to, even unintentionally, many will choose to leave. Mass talent departure is one reason M&A deals fail post-acquisition. 

To prevent your best employees from leaving, share information early and often. There are many ways to discuss a deal without sharing protected or false information. If you don’t have specific information yet, be transparent about that as well; hearing “I don’t know” is often more comforting to employees than pure speculation.

Company culture is at risk.

Your company culture will be affected during a transaction, regardless of whether you want it to be. When two companies’ philosophies and values do not match, known as a culture clash, M&A deals often fail. “Culture is inextricably linked to performance, especially in an M&A context,” according to Deloitte. “The question is not if — but how — companies should manage culture to safeguard the value of an M&A deal.”

Work to develop a cohesive culture to minimize culture clash between two merging companies. Your communications teams should create a strategic plan to convey the values and vision of the newly joined organization. Company leaders, spokespeople, public relations teams and marketing professionals should all use the same messaging. Consistency is one of the keys to unifying a company.

Post-acquisition success is challenging to achieve.

M&As can be long, complex processes. These transactions can affect employees significantly, increasing stress, anxiety and uncertainty. After the deal closes, internal communicators need to maintain the momentum, minimize culture confusion and work to improve employee morale.

The failure rate of mergers and acquisitions consistently falls between 70 and 90 percent. This doesn’t mean deals aren’t closing, but they’re closing and failing to deliver the results stakeholders expect. Frequent and open communication is central to post-deal integration and value creation. Don’t forget to communicate early and more often after the deal is signed.

Communication mistakes to avoid during mergers and acquisitions 

If a company fails to communicate effectively during a merger or acquisition, it compromises its employees’ loyalty and trust, employee retention, company culture and long-term success. Effective communication is critical during M&A for four reasons:

  1. Frequent communication reduces uncertainty and maintains a trusting relationship with employees.
  2. Proactive communication eases concerns about job security and helps retain valuable employees.
  3. Intentional and consistent messaging cultivates a unified company culture.
  4. Open communication facilitates post-deal success and long-term profitability.

Whenever a merger or acquisition deal is on the table, keep your employees in the loop as much as possible to help ensure your M&A becomes one of the 10 to 30 percent that succeed.

Michael DesRochers and Sammi Caramela contributed to this article.

author image
Julie Thompson, Senior Writer & Expert on Business Operations
With nearly two decades of experience under her belt, Julie Thompson is a seasoned B2B professional dedicated to enhancing business performance through strategic sales, marketing and operational initiatives. Her extensive portfolio boasts achievements in crafting brand standards, devising innovative marketing strategies, driving successful email campaigns and orchestrating impactful media outreach. Thompson's proficiency extends to Salesforce administration, database management and lead generation, reflecting her versatile skill set and hands-on approach to business enhancement. Through easily digestible guides, she demystifies complex topics such as SaaS technology, finance trends, HR practices and effective marketing and branding strategies. Moreover, Thompson's commitment to fostering global entrepreneurship is evident through her contributions to Kiva, an organization dedicated to supporting small businesses in underserved communities worldwide.
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