It’s every business owner’s dream to be noticed and to grow. One way to do this is to join a larger firm. But with this opportunity comes risk as well – risk that employees and customers won’t understand the reason for and implications of the change. Strategic communication, said Betsy Henning, CEO at AHA!, is one way to mitigate that risk.
“It’s incumbent on all parties to think hard about how they will communicate the reasons and benefits for the merger,” said Henning.
Henning said that you don’t necessarily want people to think nothing will change – if nothing will change, then why do it? But, she added, you should be mindful of all stakeholders and use their concerns as a starting point for your communications. Communication about the merger, said Henning, should characterize the benefits, but should also acknowledge any downsides to the situation. This sort of honest communication builds trust, she said.
Complicating matters, however, explained Steve Horenstein, co-managing partner of Horenstein Law Group PLLC, is the confidential nature of company mergers.
“Typically the acquiring the firm wants to control the communications and the acquired firm is very concerned about their existing relationships,” said Horenstein. “It takes some negotiation about when and what is communicated, by whom.”
Horenstein had the following recommendations for developing an internal communication strategy during a merger:
1. Agree on confidentiality in the very beginning with a written agreement
2. Have a joint management discussion about how communication will take place
3. Develop a plan of integration
4. Then talk to employees
John White, whose JD White Company Inc. merged with BergerABAM in 2006, said that communication with employees was key to the success of the merger. White is now a vice president at BergerABAM.
“We didn’t want to surprise any staff,” said White. “As soon as we could, we advised staff of the situation, and the CEO of BergerABAM came down for a whole day to talk to folks.”
While the JD White Company had about 30 employees at the time of the merger, BergerABAM had about 160. White said that he had to internally market the skills the JD White Company brought to BergerABAM.
“It took a while for the BergerABAM employees to understand who we were and what we did,” said White. “We did presentations throughout the company, explaining what value we could add to their team.”
White said that it quickly became apparent that BergerABAM teams had existing relationships with firms that provided the same services JD White Company did, such as public involvement or natural resources.
“We had to prove ourselves,” said White. “That was the biggest surprise to me. I didn’t anticipate the internal marketing piece.”
Helen Devery, also a vice president at BergerABAM and a previous JD White Company employee, agreed with White.
“We had to be careful with communication with staff internally, to stress that we’re all in this together,” said Devery. “Communication from John [White] and the BergerABAM CEO was critical in retaining employees.”
Horenstein, who was a board member at First Independent Bank during last year’s acquisition by Sterling Bank, was involved in planning how the transaction was rolled out.
“They were very sensitive as to employees,” said Horenstein
For example, he said, they presented clear communication about how jobs would be affected and what severance would involve.
Although important, employees aren’t the only group who can benefit from clear communication during a merger.
“We had relationships with a lot of regional and local engineering firms,” said White. “When they heard we were joining an engineering firm they thought, ‘are you now a competitor?’”
White said that for the most part these firms have come back as customers, and BergerABAM is now partnering with them, providing specific services. In fact, the landscape architecture aspect of the business, which was one of the unique skills JD White Company brought to BergerABAM, has doubled since the merger.
Horenstein said Sterling Bank did “an especially good job” of communicating with customers during the acquisition. He said that Sterling held several public receptions, with key people from the new bank available to answer people’s questions.
“They are a good example of a well thought out plan of communication and did great job of executing the plan, both externally and internally,” said Horenstein.
What’s in a name
Since White’s name was in essence the company name, he said he worked diligently to let clients know that he wasn’t going anywhere.
“I talked to everyone I could talk to: ‘Hey, I’m staying around. I’m not taking a check and running,’” said White.
For the first few years, they kept the original company name, as in “JD White Company, a division of BergerABAM.” White said this let clients know nothing had fundamentally changed about how the company would do business. Later, when the timing was right, they simplified the name to just BergerABAM. This is a common approach to help customers through the transition. For example, when FedEx acquired Kinko’s, the name was FedEx Kinko’s for several years. Later, the company name changed to FedEx Office.
If all this focus on communication sounds like a lot of work, you’re right.
“It takes a tremendous amount of energy to get a deal done,” said Henning. “And however much it required to get done, to make it successful it will take that much more.”