Congrats, You’re the Proud New Owner of a Business! Now What? Prepare for a Smooth Transition With a Strong Communications Strategy
We teamed up with Richard Phillips of Crossroads Capital to create a webinar guiding the smaller financial buyer eying the middle market. We’ve included the link to the full 60-minute webinar at the end of this article.
In a recent blog article, we discussed a communications strategy for turning buy-side challenges to your advantage when purchasing an existing business. Smaller financial buyers looking to get their feet wet in the middle market face stiff competition. But if you play to your strengths such as flexibility on terms and show the seller that you understand her perspective, you stand a good chance of making a smart deal.
Once that deal goes through, the fun really begins! Making sure the transition goes smoothly following a merger or acquisition is one of the most delicate communications situations in all of business. Getting this right calls for a strong communications strategy. So let’s talk about how to plan for a successful transition.
As you begin to develop your communications strategy for the transition, you will want to keep many of the same questions in mind as when you were deciding how to close the deal. At this point, you already have well-thought-out answers to key questions such as:
- Why this deal?
- Why your organization?
But now it’s time to think about repackaging your answers. Previously, you needed a strategy for winning over the seller. You wanted to talk about why your deal was superior to those of the larger sellers. You wanted to position your organization as an asset and key to the future of the business. Now, it’s time to think more broadly about selling the deal to additional stakeholders.
You’ll need to ask and answer the following questions:
- What does this deal mean?
- What’s next?
Each of the stakeholders crucial to making the organization’s transition smooth will want to know what the deal means for them. Employees will want to know if their jobs will be on the chopping block. Investors will want to know if their risk is about to rise. Partners and community members will want to know if they can work with you and trust you to keep the business engaged in their goals. And customers will want to know if they can expect the same quality product or service they have come to appreciate.
After you have thought through your best answers to the key questions above, it’s time to devise your communications strategy for announcing the transition. Here it’s important to come up with a plan for announcing the transition and key steps to those in the “inner circle” and a plan for announcing the transition to the public. Carefully coordinate these two plans.
Timing is everything here. If the deal gets leaked to the public ahead of letting key personnel, investors, and partners know about the change, you could have a PR nightmare to deal with on top of a transition starting off on the wrong foot. This can kill your credibility and it won’t be easily rebuilt. So do what you can to control the timing of your announcements.
Employees play a huge role in making sure an M&A transition goes off well. Consider holding an all-hands, townhall-type meeting for employees where the old guard and the new guard come together to demonstrate solidarity. Explain what’s next and introduce new leaders and any exciting new initiatives that benefit them. Allow employees to ask any questions in this forum and invite further discussion to establish open lines of communication too. Taking steps like these will go a long way toward engaging employees in a positive way.
You’ve probably already thought about how to introduce yourself and your organization to investors. Make sure KPIs, metrics, and milestones are part of these communications. Being mindful that you can’t use numbers to tell the entire story, the last thing you want is to get caught flat-footed during these first few meetings with investors. Remember that communicating with investors goes well beyond the initial M&A announcement. An ongoing plan should be part of your communications strategy going forward.
Partners and Community
Suppliers, distributors, and community partners also play an important role in any successful transition. Get out of the building and meet face-to-face whenever it makes sense. A firm handshake and steady eye contact will help partners put a name with a face and open the door to a strong relationship. Make sure you talk to your seller about any insider tips and tricks for dealing with business partners. Are there some partners who deal only in cash? Will having cash on hand give you key discounts that will increase profitability? Is there only one supplier in the state who can sell you a particular part in the volume you need?
Last, but certainly not least, you need to communicate with your new customers before, during, and after the transition. Even if you expect little to change on the customer-facing side of the business, you want to let loyal customers know about the acquisition. A strong customer communications strategy demonstrates that you aren’t simply paying lip service to the mission and vision of the business.
In this market, realize that many of the most loyal customers may have interacted with the previous owner of the business and may even think of her as part of their team. If the previous owner is willing to attend those initial customer visits or write a letter or heart-felt email about her decision to sell, this can go a long way towards winning over loyal customers and easing their transition. This helps you pragmatically too. Losing a significant number of clients immediately after the sale goes through does not look good.
Transitioning after an M&A deal is one of the most delicate communications moments new business owners face. Fortunately, the team at Audacia Strategies loves a challenge! We’ll jump in with both feet, roll up our sleeves, and get to work developing the right communications strategy for you.
If you haven’t heard Katy and Richard’s full 60-minute webinar, there’s no time like the present! You can check it out here: Succeeding as a Small Financial Buyer in Mid-Market M&A.
Photo credit: Cathy Yeulet
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