COMMUNICATING AN ACQUISITION REQUIRES CANDOR, QUICK RESPONSE

CHICAGO - Communicators whose corporations are in the acquisition or merger mode know that legalities limit much of what they can say or do. But instead of sticking to a mum's-the-word tactic, there is much that PR professionals can do while the deal is being gelled: setting up an integration team; maintaining contact with not only the soon-to-be-acquired company's execs but its staffers as well; and filling the communications gap by identifying what you don't know.

First understand that employees generally aren't concerned about the details of the deal the way the press or investors might be; rather, they need to know "where they fit in and what the big picture is," says Jack Goodman, senior director of corporate communications for The McGraw Hill Companies. In the corporate culture, it's often the case that those striking these business accords ignore their most important audience: the new employee force that might evolve or the existing one that might be wiped out.

Timeline of Communications Efforts The McGraw-Hill Companies announced in July 1996 that they had signed a letter of intent to acquire the Times Mirror higher education venture; The deal went through in October; The announcement naming Jeff Sund as the new McGraw-Hill Higher Education unit president - as well as the announcement about the new higher education unit being headquartered in Burr Ridge, Ill. - was made right after the deal closed; The announcement of the first senior tier of execs and then the subsequent downsizing was made in the late fall; McGraw president and COO Harold McGraw III met with the new sales force in January 1997; and McGraw Chairman and CEO Joseph L. Dionne went to Burr Ridge to meet with a diverse group of employees in April 1997.

Goodman shared last week how McGraw put its internal communications to the test during last year's acquisition of the Times Mirror Higher Education Group. The deal -- which was also referred to as an exchange because McGraw-Hill's Shepard legal publishing unit was traded as part of the deal - led to the formation of McGraw-Hill Higher Education, a company primarily comprised of former Times Mirror staffers.

Today, the McGraw-Hill venture is a higher education publishing company with about 1,250 employees and five sites. But before the company's new brand came to fruition, McGraw-Hill communication execs were faced with a tall order: they had to approach communications surrounding the acquisition/merger both gingerly (by remaining empathetic) as well as honestly (by being concise about what they did and didn't know) since 500 workers were eventually let go when the deal closed in October.

Last week, Goodman was among more than a dozen speakers at the Internal Communications for Downsizing, Restructuring & Mergers conference (International Quality & Productivity Center) mentoring communicators about how these highly sensitive issues should be handled. Other presenters included Chris Anderson, who unveiled how the Royal Bank of Canada overhauled its communications because of how it was perceived on the say/do front; and Jocelyn Canfield Kelemen, who explained how communications were handled when AmeriGas restructured its company.

But revamping communications doesn't come without a price tag. With the help of an outside consultant, Terrin Powers, and nearly $100,000 earmarked for its communications study, The Royal Bank of Canada undertook a months-long process to analyze its communications infrastructure. Part of the "blue book" recommendations included improving use of technology for internal communications; creating gateway functions; and conducting regular say/do tracking.

On the other hand, AmeriGas's approach called for Kelemen sitting in on transition team meetings, headed by senior VPs and VPs, so that she had a firsthand sense of what highers-up needed her to do as the company was re-aligned. Among the communications tactics used by the company was funneling concerns and questions through immediate supervisors to the transition team.

But although the industries represented were as diverse as the speakers' approaches, some common themes evolved - mainly that communicators have to undertake research; set up transition teams; employ third-party consultants; and rely on face-to-face contact (not only news relayed through memos and e-mail) when corporations are undergoing significant changes.

Goodman advises PR professionals whose hands are tied by executive mandates (as to what information about a merger or acquisition should be disclosed) to communicate to employees everything they know - and then some. That means if you don't know how many workers might be laid off, say that; and if you don't know how the new company will come together, say that.

Keeping Employees In The Loop

Before the deal was inked, McGraw-Hill used several routes to address employee concerns: management stayed in contact with Times Mirror, overseeing decision-making strategies and recommending communication channels; status-report memos released to both groups of employees were coordinated so that messages were consistent; and McGraw-Hill execs met with individual groups of Times Mirror staffers.

Communicators realized that the affected employees needed to trust the message and that could only be accomplished by making the messenger credible, says Dave Freeland, practice leader, strategic organizational communication for Watson Wyatt Worldwide, a consulting firm used by McGraw-Hill.

Not only is it rare that a tight lid can be kept on information about mergers and acquisitions, it's naive to think that the spread of information can be controlled. "When the grapevine starts working, you better be thinking about segmenting the messages for specific audience members," Goodman added. (Later they found out that employees, via the Internet, had stumbled across news about the Times Mirror putting up the business for sale months before the initial announcement was made.)

Freeland, in illustrating how communications surrounding the deal were handled, said that execs knew that both top-down and bottom-up communications weren't enough since what was needed was to "manage horizontal communications [across and throughout departments, with communication taking place at every level] to help it pay off."

Goodman also told PR NEWS after the conference last week that communications efforts like this require follow-up. McGraw-Hill recently hosted 11 focus group meetings at its five sites for 109 employees from various levels within the corporation. (Four of those sites are the former Times Mirror Higher Education Group locations - now under the McGraw-Hill umbrella - in Dubuque, Iowa, Burr Ridge, Ill., St. Louis and Guilford, Conn. The fifth is the former McGraw-Hill College Division site in New York, which was merged into the new venture.) (Jack Goodman, 212/512-4145; Dave Freeland, 212/251-5624)