Breaking the News: How to Communicate a Merger to Employees

8 Pages Posted: 21 Oct 2008

See all articles by L. J. Bourgeois

L. J. Bourgeois

University of Virginia - Darden School of Business

Gerry Yemen

University of Virginia - Darden School of Business

June A. West

University of Virginia - Darden School of Business

Abstract

The mere mention of the term "merger and acquisition" (M&A) can send messages of misinformation or half-truths. Clarity about motives and intent, as well as timing the release of information during a merger, requires strategic information management. But when is the right time to tell employees about a pending merger? Who should make the announcement, and what communication channels should they use? A recent survey of managers conducted by the Darden Graduate School of Business explored communication practices that companies use to communicate internally during their firms' merger or acquisition. This note reveals the findings and makes communication recommendations.

Excerpt

UVA-BC-0180

BREAKING THE NEWS:

HOW TO COMMUNICATE A MERGER TO EMPLOYEES

The 1990s could be described as the “decade of consolidation,” when some of the world's largest corporations merged. While at the time most headlines focused on the economic effect of the mergers, some observers noted the internal impact on the companies involved. The mere mention of the term “merger” or “acquisition” (M&A) often sent ripples of misinformation or half-truths throughout a company and had enormous negative implications for the merger integration process. Management must be clear about motives and intent as well as attentive to the timing of the release of information during a merger, but a company requires strategic management of communications both internally and externally. So when is the right time to tell employees about a pending merger? And who should make the announcement? What communication channels should be used? A recent survey of managers conducted by the Darden Graduate School of Business Administration at the University of Virginia has explored these questions about the practices that companies use to communicate internally during their firm's merger or acquisition.

Too often a company will focus on communicating a merger or acquisition to such external constituencies as the media and Wall Street analysts. Only after the news is out does management turn its attention inward, usually relying on the more traditional channels for informing employees. In the worst-case scenario, employees hear the news from neighbors, friends, or clients or read about it in the newspapers.

In contrast, merger consultants Clement and Greenspan stated: “Devising employee communications in M&A situations requires a tremendous level of strategic forethought and skillful execution.” An essential task facing a merged organization's management is the development of timely, honest, and detailed internal communications in the days and weeks immediately following a merger announcement and the eventual closing of the deal. They recommend a multiphase approach that begins as soon as the transaction is announced and carries over into the weeks and months thereafter.

. . .

Keywords: mergers and acquisitions, communication process, communication strategy

Suggested Citation

Bourgeois, L. Jay and Yemen, Gerry and West, June A., Breaking the News: How to Communicate a Merger to Employees. Darden Case No. UVA-BC-0180. Available at SSRN: https://ssrn.com/abstract=907765

L. Jay Bourgeois (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924 -4833 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/bourgeois.htm

Gerry Yemen

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

June A. West

University of Virginia - Darden School of Business ( email )

Box 6550
100 Darden Boulevard
Charlottesville, VA 22906-6550
United States
434-243-7693 (Phone)
434-243-7676 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/west.htm

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