Rock the Boat: Leveraging a Downturn to Engage in M&A

Question: What do Diageo, IBM, Bank of America and Johnson & Johnson have in common? Answer: Each company entered into or completed a successful acquisition that served its stakeholders and bottom lines well in the years that followed, and each did so during a down economy.

It may seem counterintuitive, but these success stories are just a few examples of the advantages of using economic downturns to merge with or acquire another organization. The high-profile IBM-Sun Microsystems deal that fell apart last week aside, companies of all sizes can take this opportunity to take risks and grow as a result while their peers and competitors struggle alongside everyone else.

That said, good or bad economy, M&A deals are rife with communications challenges, but effective PR can turn even the most tenuous deal into a resounding success. Todd Appleman, president of The Appleman Group and principal/co-founder of, describes an experience in which he worked with a private equity firm that purchased two competing medical imaging supply companies and merged them. In the 18 months that followed, his team helped prepare the new entity to be acquired, issuing positive press releases on a monthly basis and improving cash flow by 300%. When the organization was bought, the acquirer paid a premium.

“In negotiations, the acquiring firm said the positive public relations is what brought the company to their attention. It was PR that ultimately made my client, his executive team and the private equity firm happy with the return on investment,” Appleman says. “We never missed an opportunity to showcase the company’s process through financial press coverage, as well as sustained coverage in all of the tier-one medical imaging and radiology trade publications.”

Happy endings like this one reinforce the potential of today’s M&A climate, but they also underscore the importance of strategic communications throughout the process. To capitalize on any M&A opportunity that comes your way, consider the following strategies and best practices.

â–¶ Speak early and often. For Jose Zavala, director of global communications at Fox Mobile Group, his M&A experience centered on ongoing, consistent communications.

“The last company I worked with merged with another games company,” he says. “The overall communications/integration strategy to align the cultures and to keep employees engaged throughout the process was to provide employees with frequent and varied communications mediums with consistent messaging in all communications.” (For the gamut of communications platforms that can be leveraged before, during and after a merger or acquisition, see sidebar.)

â–¶ Team up with HR. In the context of employee relations and internal communications surrounding M&A, the HR department should become communications’ partner to ensure a transition that’s as smooth as possible.

“[In my last M&A experience,] employees appreciate that HR executives were candid and offered information about the change,” Zavala says. “Corporate communications ensured that HR’s messaging was consistent with all other communications.”

â–¶ Create a virtual information center. Once you’ve briefed employees and all other relevant stakeholders, have a one-stop shop where they can find up-to-the-minute news, status reports and background information.

“I was involved in an acquisition of a European supply chain business. The first imperative was to make communications messages and materials available to all concerned, both from the acquiring company and the acquired business,” says Charles Carr, director of corporate affairs at Celerant Consulting. “To achieve this, I set up a password-protected extranet, ready on day one with everything for media, employees, customers and other stakeholders.”

â–¶ Remember that timing is everything. When preparing to announce news of a merger or acquisition, each stakeholder group will have a different reaction, so communications execs must prepare accordingly. Anticipate a staged rollout of the news, and address internal audiences first.

“As a marketing director for a credit union many years ago, we merged with another institution,” says Julie Wright, president of (W)right On Communications. “The employees were notified first, then customers and media. The CEOs of each institution wrote a joint letter with a message to each stakeholder group including FAQs that addressed the easy—and tough—questions right away.”

â–¶ Know that you can’t please everyone. The biggest determining factor of a merger/acquisition’s success is how well aligned the corporate cultures can become, and how quickly. While due diligence to ensure compatibility is required prior to inking a deal, communications executives are the backend facilitators once the deal is done.

However, it’s important to note that there will be conflicts throughout this process, and inevitably not everyone will survive the transition. Most individuals who can’t adapt to the new culture will leave, and you should let them. In dealing with remaining employees, communicate with an eye toward the future.

“Communications should highlight the opportunities and synergies resulting from the merger,” Zavala says. “It’s important to convey this in all communications so employees remain engaged and keep up morale during the process.” PRN


Julie Wright,; Todd Appleman,; Charles Carr,; Jose Zavala,