How to keep employees informed during mergers and acquisitions and to strike a balance between the necessary transparency and the protection of other corporate interests.
5 Things You Will Learn in Just 5 Minutes
- Why transparency is so important in a leakage situation
- What risks are associated with communication that is too open or too restrained
- Why companies should communicate based on facts and with empathy
- Why regular updates are more effective than one-off announcements
- How to clearly address uncertainties without creating false expectations
Between Transparency and Restraint
A leakage poses enormous challenges for companies in the case of mergers and acquisitions, especially in internal communication. How much of the information should be disclosed? What information should be withheld in the interest of the transaction’s success? Transparency and restraint offer advantages and disadvantages that must be weighed up depending on the situation.
Transparency: activity and openness strengthen trust in the M&A process
Transparent communication is crucial to maintaining employees’ trust in M&A processes and related changes. If employees are actively informed about a leakage and the facts are explained by management, an uncontrolled spread of rumors and uncertainties can be avoided. Employees also feel that their concerns are being taken seriously and that they are being taken along in the change process, be it a company merger, acquisition or sale.
However, transparency also entails risks. For one thing, too many details can be overwhelming. Similarly, vague communication of different scenarios without a solid factual basis can cause additional uncertainty or even undermine trust. Accordingly, it requires a sensitive approach when deciding what information to communicate.
Restraint: the premise of a successful transaction and avoiding further uncertainty
When deciding how to communicate in response to a leak in the case of mergers and acquisitions, restraint and moderation must be the guiding principles. Under no circumstances should you rush into communicating promises that are difficult to keep, information that must remain internal, or even false information. Particularly when the facts are unclear, reacting to a leak at some point could have the opposite of the intended effect or lead to more follow-up questions than satisfactory answers. The result would be increasing unrest among the workforce.
On the other hand, too much hesitation can be perceived as a lack of transparency. Employees may speculate or even develop mistrust of management. A lack of clear statements can affect the credibility of the company in the M&A process in the long term.
A situational approach: the happy medium
A combination of transparency and restraint is the most effective approach in most cases. Companies should initially provide fact-based information without going into too much detail. If topics are still in development, this should also be addressed and the upcoming procedural steps outlined – again, without getting lost in the details. Additional updates can then be provided as further insights become available.
Communication should be empathetic and dialog-oriented. Regular updates and the opportunity to ask questions signal appreciation and openness. Digital tools such as employee apps and the intranet can help to distribute information in a targeted manner. Language rules can be a helpful tool, especially for managers, to feel confident when communicating with their teams.
Conclusion: Transparency should always be the goal in mergers and acquisitions, but with a sense of proportion. Open communication that both builds trust and ensures the protection of internal information sets the course for constructive and future-oriented cooperation between management and employees.
To respond appropriately in the event of an M&A leakage, you should already have answers to the following questions:
- Is there a clear plan for how internal communication should be handled?
- Is it clearly defined which information may be shared and which must remain confidential?
- Is there a designated contact person for employees?
- How flexible and adaptable is your communication strategy to new developments in the M&A process?
If you cannot answer all of these questions clearly, we invite you to contact us directly using the contact form below. We would love to be of help in setting your M&A communication strategy up for success. Additionally, you can find an overview of all the services we offer to support the success of your M&A transaction in our M&A fact sheet.
About cometis
For 25 years, we have been combining capital market expertise with in-depth sustainability analysis and structured consulting approaches. In over 1,000 mandates, we have learned to be both a long-term partner and a flexible source of expertise. Whether it’s an IPO, an M&A transaction, a (double) materiality analysis, or the complex field of ESG regulation, we bring clarity to challenging issues and create a solid basis for decision-making. Our services are tailored to promote exactly what matters to you— whether it is economic success, sustainable impact, or, ideally, both.
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