The German economy is highly sought after by foreign investors. Between 2010 and the end of last year, Chinese companies alone acquired or took stakes in 193 German firms—many of which are technology-driven businesses. One of the largest acquisitions was the purchase of the robot manufacturer Kuka for approximately 4.6 billion by the conglomerate Midea. The Kuka example in particular illustrates how important communication is in an M&A transaction. This is because the robot manufacturer represents a key German industry. The plans to sell the company quickly alarmed German policymakers. Fears were raised that know-how regarding products and production processes in the automotive industry could flow to China. The Kuka case was a major factor in the tightening of the Foreign Trade and Payments Ordinance.
Even in times of succession challenges at German companies, communication takes on greater significance and serves as a key pillar in M&A transactions. After all, by 2018, one in six companies is set to either hand over to a successor in top management or be sold. That amounts to no fewer than 620,000 companies with approximately four million employees.
This makes it all the more important for sellers to address the needs of prospective buyers during the acquisition process—particularly with regard to communication—in a sensitive, well-informed, and thorough manner. Here are the most important rules:
Long-Term Perspective and Consistency
Communication in this context cannot be planned overnight. It is essential that the seller develop a strategy with a lasting impact. In doing so, the owner must ask themselves what messages should be conveyed to the market, what the timeline should look like, and which specific communication measures—such as interviews and press releases—should be used judiciously. Those who do this correctly lay the foundation for a successful M&A transaction. The owner should take a back seat and put the company in the spotlight.Timeline
A well-thought-out timeline helps both sides navigate a less hectic process. Ideally, owners should bring in communications professionals immediately after deciding to sell. This is even more important if the company structure is complex. Thanks to their experience, PR professionals significantly reduce the risk of failure. In the case of a majority owner, for example, it must be clarified when the other owners should be informed, in what order, and to what level of detail. As a general rule, both the seller and the buyer should address the issue of communication no later than after due diligence is complete—that is, once the process of exchanging information in the data room has been finalized.Involving Key Decision-Makers
The issue of communicating with the owners has already been addressed. It is equally essential that the workforce be informed and involved in a sensitive manner and at the right time. However, experienced communications consultants repeatedly observe that customers, suppliers, and decision-makers in politics and government are informed either inadequately or too late. For example, if the company seeking to sell is currently planning to establish a subsidiary in an industrial park, it is essential to inform local decision-makers about the upcoming sale process.Authenticity and Honesty
Ever since the Middle Ages, the ideal of the honorable merchant—who bases his conduct on virtues such as honesty—has been taught. In practice, however, this image has been tarnished by scandals. That is why it cannot be emphasized enough—and this should be obvious to everyone—that honest and authentic communication, including conduct that reflects these values, is a crucial building block for a successful M&A process. Communication that is even slightly misleading erodes trust on the buyer’s side.The Use of Symbols
When cultures clash, misunderstandings often result—rarely caused by language differences, but rather by societal customs. Sometimes the sales process is doomed to failure due to a lack of understanding of the other party. While Europeans are generally regarded as level-headed negotiators who want to drive the transaction forward objectively and efficiently, the Chinese are seen as negotiators for whom rituals are important. This includes, for example, giving small gifts. It is well known that Chinese companies have a more hierarchical structure than German ones, and older employees are held in significantly higher regard than in Germany. This must be taken into account.After the Closing Is Before Communication
Anyone who thinks that the completion of a company sale marks the end of M&A communication is mistaken. There are still further communication tasks to be addressed. When companies merge, they either need a new identity, or the acquired company must be integrated into the acquiring company.
First and foremost, this involves communicating the new brand and corporate design. Details must also be considered: For example, if the new company moves to a new headquarters, building service providers, interior designers, and other service firms should be taken into account. Communication should be reflected, in particular, through the CEO. Management serves as a role model and must provide direction. Top management therefore has the task of carefully and credibly explaining to stakeholders and the broader public how the company will move forward. In the best-case scenario, this strengthens trust and confidence in the leadership. Publicly traded companies, in particular, need this forward-looking communication, as stock prices tend to react negatively to communication errors.
