Accountancy firm Dains has learned first-hand the importance of communication after completing a string of M&A deals.
In an M&A transaction, effective communication is crucial at every stage. This helps to bolster the existing shared culture between the two organisations, which, in turn, can have a significant impact on employee morale, customer trust and stakeholder buy-in.
Despite the importance of communication in the likelihood of success, it can be difficult thanks to the obligatory presence of non-disclosure agreements. Using a host of studies, the Harvard Business Review estimates between 70% and 90% of acquisitions end in failure.
“It is a very delicate balance that you try to achieve at any given time,” says Richard McNeilly, CEO of the Dains Group, which is why he advises both formal and informal meetings during an M&A process.
“You need to talk about what the deal means for you right now, but, more importantly, you need to talk about what’s going to happen after the deal is complete and what it means for the team.
Dains has acquired a number of businesses over the past two years, allowing the firm to fine-tune how it communicates with the various stakeholders involved.
“We’ve worked quite hard on thinking about the questions that people are likely to have and matters that they might have concerns about,” McNeilly tells Accountancy Age. “It is so important at every level and never just for the partners.”
Fostering a unified culture
Starting with consistent and candid communication, robust foundations are laid for teams to successfully integrate post-merger.
According to McNeilly, fostering an open culture with a willingness to share extensive information has become an integral part of everyday life at Dains.
“We have found that it is really useful to share good news, but, occasionally, when things are not going quite as well, we share problems, too. Then, I think people get the feeling that you are an authentic business and you do things the right way,” he says.
Emphasising a practice of sharing not only successes but also challenges reinforces the perception of authenticity and ethical business conduct.
Indeed, transparency plays a pivotal role in gaining buy-in from stakeholders too. Moreover, while regular and balanced communication contributes to heightened employee morale, it holds equal significance for clients.
In business, change is inevitable; explaining any disruption – be it good or bad – to clients promptly is essential in maintaining their trust.
Mastering the art of timing
In the realm of standard M&A deals, there exists a series of pivotal stages, commencing with initiation, where NDA-controlled early-stage discussions occur within a select group of partners, and progressing to the negotiation stage, which demands the exchange of in-depth information.
Drawing from Dains’s own experiences, it becomes evident that well-planned and timely communication plays a paramount role, while the consequences of poor timing can be damaging .
Once a deal is completed, it is vital to circulate all pertinent information to everyone within the entire group and within the target business, as well. The success of this was proven firsthand during Dains’s acquisition of Scottish accountancy firm William Duncan + Co.
Recognising the significance of internal communication before finalisation, the news was shared with the team. “I think that was brilliant for the team; it gave everyone extra thinking time before communications to clients took place,” says McNeilly.
Following internal communications, Dains implemented a comprehensive client communication plan, ensuring that all clients across each business were apprised of the deal’s implications.
“The minute you stop communicating you run a risk, because people will fill in the gaps themselves and create their own narrative – it’s human nature,” McNeilly explains. “There needs to be enough information, so that everyone feels well-informed, engaged and trusted.”
McNeilly underscores the importance of continuous communication, as lapses in information sharing can lead people to speculate and create their own narratives – a natural human tendency.
Overcoming obstacles
In the intricate landscape of M&A transactions, complexity is an ever-present reality. Tight timelines can often lead to communication lapses, risking misinformation. To conquer this common challenge and maintain clarity, McNeilly advocates for a uniform approach where delegation plays a vital role.
Dains’ CEO also highlights the value of implementing a comprehensive M&A plan, which details the deal from the start of the process to the very end. Dains’s plans are enriched by the invaluable lessons gleaned from previous acquisitions.
To ensure seamless execution, the firm has a dedicated project manager who diligently keeps everyone on track and informed of their tasks and timelines.
“It’s very easy for things to get missed, because you never quite know what surprises can come out of due diligence,” McNeilly adds.
Ensuring transparency beyond completion
Another prevailing challenge in the M&A process arises from a lack of transparency once the deal is finalised.
McNeilly highlights the significance of post-transaction communication, as failure to do so can lead to misunderstandings and the potential loss of key team members, particularly in the highly competitive employment market we face today.
Transparent communication not only serves as a preventive measure against employee resistance but also fosters inclusivity, which is pivotal in sustaining a cohesive and shared organisational culture.
To achieve absolute transparency in the post-transaction phase, McNeilly advocates for a multi-channel communication approach.
“Frankly, you can’t do everything face-to-face and you can’t do everything on Teams or via email or on social media or WhatsApp. The fact is we’ve got lots of different people who like to receive and share information in different ways,” he says.
While the pathway to M&A success will not be the same for any two businesses, there are some key considerations firms should bear in mind. As McNeilly wisely observes, clear communication remains the key to success at every step of the journey.
