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  • 24 Jan 2018

Communicating change

Bob Cronin of The Open Approach outlines how to maintain loyalty during a company sale

Change is inevitable, so it should be a lot easier to accept. Yet for most, it’s a struggle. This is true in virtually every situation, but in the sale of a business, reactions can be drastic – with responses varying across the spectrum. While proprietors have their own concerns, they’re the ones steering the change and thus have a positive vision. Others may not share this sentiment. For employees, for instance, a change in ownership can be one of the most tumultuous experiences they ever encounter.

Founded or not, people’s reactions to the news of their company being sold is often one of worry and dismay. Unaddressed, such feelings grow into contempt that could result in the loss of customers, personnel, and even the deal itself. While there’s no perfect time to announce a transition, it’s inevitable that you strategically communicate it – and do so wisely. It takes only one nervous sales rep or scared purchasing agent to start a ripple that shakes your entire value chain. 

Having seen the damage this can do, I always recommend having a communications strategy in place before you begin a transaction. It should cover what information to release, how and when to release it, and to whom. You should run it past advisors, top management, colleagues – and even spouses – and make refinements for best effect. At its true scale, a company sale is the transfer of an entire organization, not simply the exit of an owner. It must take everybody into account, and it must get everybody engaged and participating in the process.

Beyond this, you need to prepare a plan that’s crafted to achieve your goals, not just one that hopes to be addressed in ensuing ownership. This is where advisory expertise comes in. In my 10+ years in label and packaging M&A, I repeatedly see five areas as the key focus points. By incorporating considerations for these, you’ll demonstrate that you not only understand your potential obstacles, but that your rationale provides for clear, concise, directional guidance that will keep your company and people united and positioned for the future. 

1. Operational focus 
When going through an M&A transaction, many parties are needed to gather information and direct the efforts to bring a deal to a conclusion. This means there can lots of strange people in suits spending too much time hanging around the plant. Buyer or seller, this can be very distracting. Moreover, if employees don’t understand what’s going on, this can raise a lot of questions. 

Map out a clear operational focus first with your advisors. Discuss your intentions and exit strategy. Then, work together to determine the timing for communicating the planned change. This may need to be accomplished in tiers to enable you to cover the issues that are most applicable to specific groups. 

When you’re ready, remember that how you communicate the change is key. Identify your key staff and future roles, enlist their support, and work on effective messaging for the entire team. Clearly articulate the vision, goals, expectations, and impact of new management. Be prepared to answer questions about what the change means to people’s jobs and the future. In order words, present a picture that instills confidence in the operational focus going forward. You’ll need to make sure to dispel any doubts that the new structure can and will achieve the path you’ve laid out. How you communicate your message will go a long way in ensuring a successful process.

Most important, make sure your team hears the news from you first, rather than getting it from the grapevine. In today’s wired world, too many employees find major news or M&A activity about their company through facebook – or from vendors sharing something they found on Twitter. 

2. Trust 
Every successful label and packaging company runs its business on a high level of trust amongst the team. If the trust erodes during a transaction, whether between owners, sellers, buyers, or the team, the ability to successfully recover becomes next to impossible. You need all key players to be part of the future direction and understand its consequences and opportunities. This doesn’t simply mean telling people what they want to hear. Smart people get irked over omissions and exaggerations. They also don’t respond well to pithy assurances. In fact, sometimes the ‘don’t worry about it’ comment can be more worrisome than anything else. Keep your close team and managers in the know. 

Discuss your concerns and challenges. Talk openly about what problems may arise during or after the deal. Get their input on the positives and negatives. Their insights my open up new and valid considerations. Trust them, and they will trust you. 

No matter how your company will look post-sale, it will still need to function in a manner that will allow for the vision to become reality. It needs your people to make it happen. 

3. Customer impact
Ironically, for many businesses preparing for sale, the last group considered are customers. Yet, in most cases the ‘customer list’ is really what is being bought or sold. 

Consider how important the top 10-20 (or even 50) customers are to your business. Then ask yourself how to keep them loyal and secure. How would a change in ownership affect them? What concerns might they have? What specialty knowledge, capabilities, capacity, or other manufacturing facets would be integral? Are there legal, certification, or confidentiality issues that would need to be addressed with a new management team? And personally, if you were in your customers’ shoes, how would you feel about this type of change? 

During a recent deal we orchestrated, a top client made their thinking clear. They explained that they felt very important to the selling company, but knew that their smaller volumes would make them less important to the new, larger entity. Thus, they abandoned the new company upon sale. While this particular client was honest, many clients may not be. You need to fully review, analyze, and consider the effects of your pending transaction on your customers. Take action to accommodate these. Handle this early and make adjustments. Establish a plan to communicate the change to ensure you maintain the bonds to keep your company thriving. 

4. Competitor perception
When your competitors catch word of your transaction, you can expect them to be circling your clients like sharks. Indeed, it will be the time customers may actually be open to a new supplier if they’re confused by the potential impact. In many cases, you share a book of business with multiple suppliers, and clients divide work amongst these suppliers to get the best service. 

In addition to communicating prolifically to your customers, make sure the news you’re conveying (via social media, news releases, salespeople, etc) details the transaction in a positive fashion. Don’t shy away from media exposure or expect the buying entity to put out the best message for you. Craft communications that reinforce the company’s strengths going forward, and demonstrate the energy, support, and passion your employees and customers have in the new entity. 

5. New trajectory
Finally, as you sell your company, communicate to people the technologies, talent, and growth opportunities that will open up for them. These can be new production abilities, equipment or finishing benefits, mailing savings, consulting knowledge, industry specializations, and more. For staff, highlight new products, cross-training opportunities, in-house capabilities, perks and incentives. Whatever your benefits, make sure all your people are well aware. But such information can be overshadowed by the deal at hand. Be positive, yet be honest. The full and rich benefits of a sale should never be a secret to your constituencies. 

So what’s the best way to communicate change? A focus in these five areas is a start for ultimate transaction success. Keep your people inspired and motivated through the process, and work to ensure sales stay intact and your company remains positioned for a profitable future. 

Through all your actions, stay diligent. Whatever you do, make it a point that your star continues to shine brightly far beyond your exit.

ABOUT THE AUTHOR

Bob Cronin is a regular columnist in Labels & Labeling, writing about M&A activity in the industry.

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