Internal communication as a success factor in M&A transactions

Often it is the employees who are most strongly affected by a fusion or takeover. Yet especially when the need for information is greatest, communication is often only possible to a limited degree for a variety of reasons. On the other hand, missing or insufficient information creates uncertainty, raises questions and is a fertile breeding ground for rumors. For this reason, internal communication plays an important role during M&A processes but is at the same time subject to very divergent interests.


In the case of fusions or takeovers, internal communication faces three challenges:

Confidentiality: Until an official announcement has been made, communication is generally restricted: Confidentiality agreements and stock corporation law result in a de facto prohibition on information to employees.

Long periods of time: Months – if not more than a year – can pass between the announcement and the completion of a fusion or takeover. One reason for this is the need for antitrust reviews.

Employees’ own involvement: Managers are needed within the company as disseminators, but they themselves may be affected by extreme changes that can even include the loss of their own jobs.

However, internal communication has different possibilities to meet these challenges. In order to keep the confidentiality phase as short as possible despite rumors, a company needs a leak strategy that involves its employees. At a minimum, this should comprise the distribution to the employees of any ad-hoc press release that is published in the event of a leak, along with an explanation of why it isn’t possible to say more at that time.

After the official announcement, communication becomes easier, but is still subject to legal restrictions. Until closing of the deal, the companies involved are often still competitors and can only exchange information to a limited degree. This, too, should be communicated to the employees – because usually the media presents the transaction as if it were already completed, and that encourages employees to think that they will hear details of their future roles very soon.

Even after closing, significant questions – such as who will fill management positions at the second and third levels – are generally still unclear, and in many cases, there are negotiations with the works council. As long as content questions are still open, the communication can at least address questions of process: When will which management level be in place? When will the negotiations with the works council conclude? What criteria govern the way we proceed?

When communicating with managers, dialog in personal meetings or telephone conferences is indispensable and should be flanked by written materials. The toolkit should include handouts that describe legal restrictions and make recommendations for dealing with nominations (or non-nominations) for positions.

There are numerous channels available for communicating with employees, including live broadcasts of employee meetings, personal visits by top management to various locations, and dialog formats that use internal social media.

Experience from many transactions shows that there’s no such thing as too much internal communication in M&A processes. In particular the real work of integration that begins after closing of the transaction must be supported intensively through internal communication that has been prepared in line with each target group’s needs. It should focus especially on those groups of employees who are actually affected by the integration.

The article was originally published in the edition 12/2017 of the German PR Magazin. Please find here the current e-paper of PR Magazin, including questions answered by further experts.

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