Communication During The Process Of M&A

1377 words - 6 pages

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Communication during the process of M&A

Mergers and acquisitions provide a great opportunity for growth to the organizations. Together the companies can strive for growth and higher profits using smaller amount of resources. However, it is not easily implemented and many factors should be taken in consideration in order for the merger to be beneficial and successful. Studies show different numbers, but according to Harvard Business Review, 70 to 90% of mergers fail and therefore companies incur losses. There are many wrong business decisions that managers can make during this process, but this paper will be focused on internal communication practices that contribute to the ...view middle of the document...

So, the fist thing that has to be communicated to the employees is whether the companies are merged or one becomes acquired. This will help to set the tone for future communication. Such miscommunication served as one of the reasons for Daimler-Chrysler failure. In the beginning the merger was described as “merger of equals”, but in the reality it was not the case. Daimler did not treat Chrysler as “equal” and many of Chrysler’s executives were resigned. Daimler dictated the terms for the new company, which caused complaints among Chrysler employees and resulted in serious communication challenges.

• Cultural shock. If one organization is acquired, the management of the parent company should recognize possible cultural differences. The management should ask a question: How things are done around here? For example, if the executives had an open door policy, or the employees had to make an appointment to see their manager. Is the company hierarchical or it uses egalitarian approach? Then it is the management’s job to find the answers. Instead of pushing new cultural sets, the employees should be introduced to the new policies and values on a step-by-step basis and given some time to adapt. Managers of the acquired organizations should be involved in the process because they know what works for their business. Analysts agree that that cultural gap was one of the main reasons for the failure of Daimler-Chrysler. American and German managers had totally different values, which drove their work. Departments were heading in opposite directions and were not working together.

• Future over Past. After a merger, employees will be anxious and nervous about the change. It is the nature of people to be emotional and not always rational when facing unknown. Now their workplace is going to be completely different and the changes may not always be positive due to the restructure and possible layoffs. CEO may develop a blog in which he or she will talk about the short and long-term future of the new company to keep employees focused and help them think positively about the changes. It is essential to help employees believe in success and prosperous future over the past. Employees should believe that strong organizations are able to adapt the change, face and overcome challenges.

• Benefits vs. Drawbacks. Management must help employees believe that the merger happened for the well being of the whole company including each one of them. For this reason, as an initial step, managers should work closely with their teams and be open for communication like never before. Employees will rely on their management team for the information and directions, and therefore strong communication, led from the top, is essential. Messages should be clear and direct as possible. During this time managers should have an open door policies, be able to listen to worries, and try to help relief anxieties. Later on, management should emphasize successes if the company reached...

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