Art of M&A Communication
By Tom Zucker, President
One of the biggest hurdles an owner experiences is notifying family, customers, and other business stakeholders that they have decided to sell their business. The fear of their response to the message is often worse than the conversation. After years of guiding business owners through these discussions, here are a few of our observations and suggestions.
Control the Message
The timing of disclosing ownership’s desire to sell is complex. Deal makers often refer to the notification process as “bringing them under the tent”. In general, notifying employees on a need-to-know basis reduces deal risk. Sellers typically notify the President, Controller/ CFO and Operations Managers first given their awareness of the business and the need to have an active role with potential buyers. It is quite common that the majority of the employees are notified shortly after the transaction closing.
Make it Personal
The famous quote from the Godfather, “It’s not personal, it’s strictly business” does not apply when communicating your intent to transition your business. The message and tone need to be very personal and filled with gratitude and appreciation. Personally thanking key employees and assuring them that their roles and responsibilities will continue is especially important to the seller, buyer and the employee. These messages are often emotional and sometimes involve “thank you checks” being issued to tenured employees. It is important to be available for these discussions to help with the closure of your tenure as owner and leader of the business.
Key customers and suppliers value the same personal approach. Buyers will request to confirm the relationships intent to continue buying from the company prior to closing. This communication is extremely sensitive and must be approached with great thought and consideration. Owners should resist the urge to over communicate with customers. We have seen times where an owner overly communicates with customers which leads to uncertainty and increasing the risk that the customer considers alternative suppliers. A seller needs to know when less is more.
The choice of media and timing should be as personal and respectful as practicable, tailored to each group’s circumstances and needs. Owners should also consider following up their verbal notification with a clear and concise letter reiterating the key points.
Anticipate Their Response
Each stakeholder of the company will respond differently to your message. While most people will positively respond to the news of your business sale, not everyone will respond in a rational or positive manner. The ability to anticipate one’s response requires awareness and emotional intelligence. We all know the characteristics of the person that will be distraught, upset, or overly emotional about your decision. Plan your communication with these people carefully and thoughtfully.
The journey of selling your business is an exciting time filled with excitement, joy and hard work. The ability to successfully communicate to your business’s key stakeholders is essential to a successful outcome. Identifying key advisors skilled at the Art of M&A Communication will increase the likelihood of a successful outcome and less sleepless nights.
To learn more about the 4 C’s of Transition Planning visit: The Seller Experience: Preparing the Owner for Transition
© Copyrighted by Tom Zucker, President of EdgePoint Capital, merger & acquisition advisors. Tom can be reached at 216-342-5858 or on the web at www.edgepoint.com.