What Is the Role of Communications in M&A Activity?
The US author Terry Goodkind once said that ‘reality is irrelevant, perception is everything’, and while that’s only partially true when it comes to merger and acquisition (M&A) activity, an attractive external image can make all the difference when it comes to being chosen for potential investment. But what is the role of communications in M&A, and how can marcomms teams help ensure their organisation is presented as an attractive opportunity to investors?
Perception is particularly key when we consider that, even in the intensive and highly scrutinised financial markets, some organisations slip through the cracks, and secure investment essentially on image alone. Theranos, for example, touted itself as a breakthrough health-tech company, suggesting that its blood tests could diagnose a range of diseases and illnesses from very small amounts of blood, all delivered through its compact automated devices. These claims turned out to be false, but not before the organisation had secured over $700 million in funding, and reached a valuation of almost $10 billion. While this is an extreme example, and M&A activity is far more highly regulated and monitored, it does highlight the impact that effective communications can have on an organisation.
The Role of Communications in M&A Activity
Modern M&A is among the most complex and high-stakes events in the corporate world, and fusing two businesses is an incredibly challenging and intricate process, requiring significant strategic, financial and legal nuance, and considerable work.
While the focus is often on the aforementioned legal and finance teams, the role of communications and marketing is often underplayed. In reality, it spans pre-deal due diligence through to post-merger integrations, ensuring that stakeholders, employees, investors, and customers are engaged, informed, and reassured throughout the process.
Before the deal even reaches the table, effective marcomms activity helps to shape the narrative and position the organisation as an attractive, strategic investment opportunity. Private equity firms and larger corporate businesses are always on the hunt for the right partner, and there is no better way of promoting a company than via effective communication.
When the deal has been potentially lined up, marcomms specialists help to develop stakeholder engagement strategies with consistent but adapted messaging for different groups that manage expectations and maintain trust. They also build out internal communications strategies to keep staff motivated and mitigate any uncertainty from what can be an anxiety-inducing process for workers, ensuring they remain productive during potentially lengthy periods of transition.
A well-prepared communications strategy ensures that the company can respond to any potential threats, both internal and external, without affecting the perception of the wider brand as an investment opportunity. They will also support the critical role of investor and financial communications, and ensure that the market is receiving clear, consistent, transparent and, crucially, accurate, data about how the deal will affect financial performance. This activity will likely be supported by specialist investor relations experts, but communications teams still play a critical role in gathering and disseminating this information.
Shaping a New Brand
Both during and following the completion of the deal, marcomms teams on both sides must make decisions about their identity, and whether one brand will absorb the other, or a new brand will be formed out of a combination of the two entities. This is a critical stage, and investors will want to see a return on their funding, so ensuring that the new organisational identity resonates with audiences, and encompasses the stronger elements of the two businesses is key. This task will fall almost entirely into the lap of marketing and communications specialists, who will need to assess existing brand equity and devise positioning strategies to ensure smooth market adaptation.
There are also multiple other factors for marcomms teams to manage, notably regulatory and compliance messaging in what will be a highly scrutinised period of change, with external legislators monitoring all aspects of the deal for any potential regulatory breaches. In addition, they will also need to deal with significant periods of change management and cultural integration whilst also ensuring customer retention and loyalty remain an organisational priority. That’s on top of the go-to-market strategy post-merger, dealing with new elements of online reputation management, and upgrading employer branding and talent retention strategies, to name just a few.
Growing Workloads
As you may have gathered, M&A activity can drastically increase workloads, and the challenges facing organisations and their specialist marcomms teams. But help is at hand. Our expert team has supported several organisations during periods of M&A by ensuring that their communications, marketing and digital teams possess the right skills to help navigate the intensive change and flux. We specialise in sourcing professionals on a permanent, interim, and contract basis who can manage high-pressure environments, drive strategic messaging, and execute campaigns that sustain stakeholder confidence.
Effective communication isn’t just a bolt-on addition to successful M&A activity, it is a fundamental driver of successful integration, and without it, few organisations would even get to the stage where they are an attractive investment opportunity. Marcomms experts play a critical role in not only attractively positioning an organisation, but also ensuring that the post-merger transition is managed smoothly and effectively and that the new business promotes the strengths and expertise of both brands.
For organisations undergoing M&A, investing in a robust communications and marketing strategy—and the right talent to execute it — is a strategic imperative. By leveraging the expertise of skilled professionals, businesses can navigate the complexities of mergers and acquisitions with confidence and clarity, ultimately maximising the long-term benefits of their transactions.
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If your organisation is going through a M&A and needs additional support within your communications team,get in touch with our expert team to find the specialist talent it needs to thrive.
