Like many of you, I’ve lived through several mergers and acquisitions throughout my career, and rarely have I seen them go smoothly. The top brass brokering the deal is very concerned with the legal contracts, billing and accounting systems, IT and technology issues, and big HR concerns.
These are intensive initiatives to tackle. However, there are four areas that seem to go neglected. They are very noticeable after the dust from these big disruptions begins to settle. Left unattended, they can make for a very messy and prolonged integration. Sometimes, they can result in the buyer imposing purchase price adjustments due to contingencies and clawbacks that are likely to exist in a sale contract.
First, it’s always about communication. Clear, early, and frequent communication with your clients is critical to prevent losing them and the coveted revenue they represent. Don’t leave them to wonder if their pricing will increase, if distribution will be interrupted, or if they’ll lose the account rep they’ve come to rely upon for good service. Keeping customers informed creates security. It prevents them from searching out another vendor or supplier. Can you even begin to calculate the lost time and high cost of finding a new customer to replace each one you lose? Can you predict the impact of lost customers on the sales price of the company due to earnout contingencies or retroactive clawback provisions?
Internal communication barely receives a nod. You cannot underestimate the impact of clear, early, frequent, and transparent communication from top leadership to employees. The uncertainty created in a business undergoing continual change during an integration is very stressful. If they don’t believe their jobs are secure, employees will jump ship earlier rather than wait for the axe to drop. Top leaders set the tone in a company. If you want to drive success, you need to keep your people informed, so they will row with you, not away from you.
A study from the Society of Human Resource Management (SHRM) estimates the cost of replacing a salaried employee at six to nine months’ salary on average. That means you take a hit to your bottom line of $27,000 to $40,000 in recruiting and training expenses for one manager whose salary is $80,000. When leaders are transparent and inform employees throughout the process, they can stabilize the company by reducing uncertainty and fear.
Keep in mind that even one recent bad review on Glassdoor or another site can kill your recruiting efforts. If you seek to hire to support your growing company, you should count on job candidates researching your company online. A Forbes article reported that among job seekers, “48% had used Glassdoor at some point in their job search.” It also cited a study that found that “60% of job seekers would not apply to a company with a one-star rating (on a five-point scale).”
A fourth item that is symptomatic of lack of planning, is leaving your LinkedIn or other social media sites to languish with old business descriptions. Really? This is your market-facing calling card for millions to see. Pay attention to it by updating it quickly and accurately. Post good news often and consistently to convey your emerging value proposition. Remember, your employees and clients (and everyone they are connected to) will be reading your LinkedIn page to see what’s going on.
Use this FREE listing to your advantage. Make it easy by giving everyone new text to copy and paste into their profiles to communicate a united message about your company. It is also likely LinkedIn is your sales team’s main lead source, and if it is outdated and lackluster, you could take a hit with lost sales opportunities or sales turnover.
Integrations are tough, require strong leadership, and can go much smoother when these simple four areas are added onto the daunting checklist. It is entirely possible to reduce the chaos and increase your success with a little strategic planning earlier in the process. Crafting a well-thought-out PR strategy to get the message right and scheduling communication along a project timeline is an efficient and effective way to handle these communication processes. If you’re unsure what to build on your business integration checklist, see guidance from a seasoned advisor.
Note: This article first appeared as a blog on the website of Integrated Growth Advisors, LLC, where the author was serving as Chief Marketing Office and a strategic marketing consultant.