Healthcare companies Ciba-Geigy and Sandoz recently merged to form Novartis. Astra and Zeneca are engaged to marry. So are Hoechst Marion Roussel and Rhone-Poulenc Rorer. Every day, more hospitals are merging into larger health-system networks. Healthcare companies today seem to have heard a mating call and many are responding.
Whether you're undergoing a merger or acquisition, you will need to talk, talk, and talk some more. An influential sphere of constituencies surrounds each company involved in a merger - employees, customers, vendors, the community and, of course, shareholders. You have two choices to make during the birth of a new company - let these groups assist you during the transition or alienate them.
These stakeholders will be the fledgling company's first spokespeople to the world. Employees will be concerned about the new company's health; customers will ponder its strength and stability; shareholders will speculate among themselves and with your competitors about its future.
Testing the Waters
As soon as two companies decide to merge, they need to start taking the temperature of stakeholders - internally and externally. What feedback have they given your company in the past? What issues are of greatest concern and import to them? How do you think they'll react to the merger or acquisition?
Here are the first three steps a newborn company should take:
Identify key constituencies.
Some stakeholders are obvious - trusted thought leaders, department heads, major customers. But other groups must be consulted, too - vendors and those influential employees who act as internal and informal - but powerful - thought leaders. These bellwether employees may not always have a senior title, but they're part of the heart and soul of a firm. Other employees flock to them when they want to understand what's really going on. Their participation in planning the new company's future will invest your employees in its success.
While a company's vendors may not get the same attention as its clients, respect them as stakeholders, too. Vendors are out in the marketplace - they'll be spreading the buzz, good or bad, about the new firm.
Assess past feedback. An extremely useful task for merging companies is to analyze past feedback from employees and clients. A merger presents a rare opportunity - the chance to make fairly radical changes to resolve reported problems. Employees and clients expect change during mergers. They'll accept changes they may have balked at in the past, as well as the new changes mergers demand.
Draw up crisis scenarios. How do you think your stakeholders will react to the merger? Consider their worst reaction and their most likely one. Then articulate how you want to touch each constituent.
Ready, Set, Merge
The birth of a new company from two old ones means that two communications departments, two executive committees, two or more of most everything must come together and start acting as one - while at the same time preparing for redundancy reductions. To make it as easy as possible:
Establish a structure, ASAP. Early on, the top leaders of the new company must decide who has the managerial responsibility to review and approve such items as communications materials and initiatives. An organizational chart needs to be clarified, drawn up, and put in place - even if it's an interim one.
Break from the past. A new company needs a new image - the world is watching. Even if the media paid scant attention to its progenitors, the new company is news and will attract attention.
To build your image:
- Have a vision. Define your new company: What do you want it to be? Where do you want it to go? How would you describe its mission?
- Attend major industry events. Let people know you're out there, alive and kicking.
- Send out regular communications (not just about the merger). If your workers and customers don't hear from you, they'll worry about the health of the new company.
- Choose a philanthropy or philanthropic theme. This should reflect your vision of the company and that strategically promotes and legitimizes your brand.
- Set milestones. These could be merger milestones, operational milestones, communications milestones - whatever is important to the new company. Make sure you let your internal and external audiences know when you achieve them.
Nancy Turett is president of the healthcare and consumer divisions of Edelman Public Relations Worldwide. She can be reached at 212/704-8195.
Her partner for this month's column is Fern Lazar, EVP and director of corporate healthcare.
Key Merger mistakes
Edelman counsels several merging businesses. Some of the mistakes we've seen companies make include:
- Trying to merge in stages. Some companies think it's easier on employees if they release information and/or make changes incrementally, but people want to know the full extent of what the merger means. They want all the news, all the time.
- Telling the press first. No employee or client wants to hear about a merger for the first time through an article in The Wall Street Journal. Release the news to your stakeholders at the same time you alert the press.
- Disappearing the little guys. It happens more and more often: a pharmaceutical giant acquires a small biotech firm to capitalize on its creativity and cutting-edge research. Then, too often, it chews up the little guy and demolishes its spirit. A better way to encourage the smaller company to keep up the forward-thinking research that attracted you to it is to avoid changing its name or reprogramming it.