Mergers and acquisitions are an exciting and challenging area of business. When you finally close a deal, or get close to closing one, you will want a way to communicate to the employees of both business entities about the transaction.
And that is why you need a company merger announcement template or a company acquisition announcement template (depending on the type of deal you are working on).
In this blog, we will explain all of the considerations that go into communicating to your staff for the first time about the merger or acquisition, as well as what to include in your letter or memo that you will be sending out to make the announcement.
But before we get started, make sure you download our template (and complete M&A Guide) for company merger and acquisition announcements here:
Okay, now let’s get started!
Considerations for Announcing a Company Merger or Acquisition
There are several things your organization(s) will want to consider before announcing a merger or acquisition. It is important to spend time reviewing all of these considerations before announcing because of the importance of your transaction being successful in the long term.
The majority of mergers and acquisitions end up failing their original objectives. And that is just one issue to worry about! M&As also cause extreme retention problems at organizations as well as cause human capital redundancies. (Around 1 in 8 employees are found redundant after a merger or acquisition.)
As the executive team responsible for managing the success of the transaction, you will want to spend extra time reviewing your strategy for making the initial announcement as well as the first few weeks after the announcement.
Here are some of the most important considerations about this phase of the project your transaction team should review before making the initial announcement:
Who do we need to make this announcement too?
Obviously you will need to notify the employees at both joining business entities, but you will also want to make a list of other important stakeholders that will need to know this information.
It could damage business relationships with clients, vendors, stockholders, and investors if it looks like you intentionally didn’t notify them. Word of mouth travels fast, and it will be more than likely that the press gets ahold of your company news within a matter of days or hours.
So, while focusing on this initial announcement is great, you will also want to have letters prepared for each of your specific stakeholders that will notify them of this change sooner rather than later.
Do I have retention plans in place?
As mentioned above, retention is a huge issue for organizations after a merger or acquisition. Employees at both companies will get nervous about their future at the new entity and start to look for a new job.
Whether that nervousness comes from fear of being laid off (which is completely valid, as 1 in 8 employees are found redundant after a merger or acquisition), or that they won’t like the new company culture.
Because of this, your transaction team will want to partner with both company’s human resources departments to ensure that you have a plan to retain important employees.
There are several ways to do this. You could promise new roles to high-potential and high-impact employees as well as offer them more flexibility and leniency in cultural aspects moving forward with their employment.
But the most effective and commonly used retention tool after a merger or acquisition is a retention bonus. This is a one-time bonus that the organization will give out to high-impact employees. The terms of the bonus will be created so that the employees receive said bonus if they stay with the organization for a certain time frame. (Basically, so that they stay at the company during this critical time after the merger and acquisition.)
How will we combine the organizations?
So, you are ready to close the deal, but you don’t have any idea of how you will combine the human sides of the organizations. It's still fine to move forward, right? Wrong!
Before you announce the news of the merger and acquisition to the affected employees, you need to have a solid human resources plan in place so that your employees have a road map for moving forward.
As stated above, most mergers and acquisitions fail. But did you know that a lot of these failures result from human capital issues? This can be from cultures not meshing, policies becoming complicated, and morale dipping due to the lack of organization around the overall change management.
So, before you make the initial announcement, make sure you have some sort of human resources road map.
A Company Merger and/or Acquisition Announcement Template: What should you include?
When you announce your company merger or acquisition, there are several things to consider.
The initial announcement will be responsible for letting your investors and employees know that you are currently working on closing, or have closed, a merger or acquisition.
The announcement should include the following information:
- Details about the companies
- Provide information about what each company does, what products or services they sell, their mission and values statements, and the history of the organizations.
- Transaction effective date
- If the deal is finalized, provide the date at which is was finalized. If it is not yet finalized, provide as much information as possible about the upcoming date that you legally can.
- Reason for the merger or acquisition
- Your organization is merging or acquiring for a reason, right? Well, explain this to your employees. Is it because the company’s technologies are complimentary? Will it allow your organization to expand into a new market? If you explain the reason for the transaction, your employees will be more supportive of it.
- Goals, impacts, and new objectives of this transaction
- The more specific you can be about these, the better. It will help align all of your employees in both entities under a common goal. Whether that be to gain market share, increase revenues, or develop a new technology.
- Information on the specific business being merged or acquired (What do they do? What do they sell?)
- Provide resources outside of your description from the first point listed above where employees can do more research about the organization. This could be a PDF, or a link to an intranet website page.
- Any quotes from involved parties, such as the CEO, or other relevant people involved in the merger and acquisition deal
- Times of change are more successful when people have a leader to follow. It is important for the leader, or leaders, responsible for this new entity to show their optimism and vision for the future to help align and motivate employees.
- Updated logistical information, such as a new website, location, or logo
- There are several different departments in your organization who will need this new information. Such as your marketing team, legal team, shipping team, etc. Make sure that you provide all the information they need, and give them the details about when they should start using the new logistical information.
- Contact information for representatives at your organization
- A lot of the employees at the two organizations after the deal will have questions about how this will affect their individual employment. Make sure that you provide them with contact information for a human resources representative that can answer these questions. Also, make sure that your human resources team is prepared to handle all types of questions that could come up from the employees.
- Boilerplate legal information
- Make sure you have your legal counsel review the announcement! They should include boilerplate information related to confidentiality, contracts, and what else.
It is important to let your employees know earlier rather than later about a merger or acquisition. Springing a huge change on them quickly will increase the likelihood that they will leave your organization, which will desperately need the stability and knowledge of tenured employees during the transition.