When it comes to announcing your M&A deal, you have one chance to get it right. You better make it count.
Congratulations on your deal closing! But you’re not done. The transition to the buyer is the final step needed.
Over 80% of mergers and acquisitions fail.
The chances are that you have reps and warranties that bind you to a successful transition. The last thing you want is to get caught up in litigation for failing to meet your reps and warranties.
Your buyer depends on you to ensure there are no hiccups in the transition. The last thing you want to see is your employees quitting over a botched transition.
Your competition is only too happy to welcome your employees and customers.
When announcing your M&A deal, there are five fatal mistakes that you want to avoid at all costs.
Who am I, and how do I know?
I started my eLearning business right out of my MBA program with no money, experience, or team.
My new best friend was failure which happened every day. My grit and determination were the saving grace to welcome success.
When my business was successful, I received a 7-figure offer from an experienced buyer.
To everyone’s dismay, I said “no” to the 7-figure offer. Instead, I said “yes” to mastering the art and science of a liquidity event.
Today, I pay it forward. I help business owners through a 90-day system called the Deep Wealth Experience.
The 9-step roadmap helps you think like your future buyer. First, you learn how to find and remove the skeletons in the closet. Second, you learn how to find the hidden Rembrandts in the attic and put them out for public display.
What are the five fatal mistakes, and what can you do?
When Announcing Your M&A Deal, Never Say That It Is A Merger Of Equals
Two things remain irretrievable: time and a first impression -Cynthia Ozick
When announcing your M&A deal to your employees, never say that it’s a merger of equals.
Most business owners find the transition to be the most difficult part of a liquidity event.
It’s hard to say goodbye to the people you’ve seen every day for many years.
Your employees are looking to you to set expectations for the days and months ahead. But, unfortunately, when speaking with employees, it’s all too easy to say things at the moment.
It’s become a cliché to hear that a liquidity event is a merger of equals. The fact is that it is not a merger of equals.
When announcing your M&A deal, never say that the deal is a merger of equals. Your employees will hold you to an impossible promise over which you have no control.
Remember, perception is the reality.
The actual reality is that the buyer will do what’s best for the new enterprise. Often time, buyers favor the known versus the unknown.
We all do.
Despite due diligence, your business and employees represent the unknown to the buyer.
The last thing you want to do is provide the employees a reason to become disillusioned. Announcing that your M&A deal is a merger of equals gives the impression that your employees have a say in matters.
While your senior executives may have a say, your employees do not. When announcing your M&A deal, stick to the facts.
When announcing your M&A deal, never use the “C” word. Do you know what the “C” word is and what you shouldn’t say?
When Announcing Your M&A Deal, Never Say That The Cultures Are Similar
A tiny change today brings a dramatically different tomorrow – Richard Bach
When announcing your M&A deal, never say that the culture is similar.
In reality, there’s a good chance that the culture of your business and the buyer’s are similar. But, at the same time, it’s your rich culture that was attractive to the buyer in the first place.
As similar as the two cultures are, your employees will look for and find the differences. Remember, a liquidity event represents a big change for your employees.
People don’t like change, especially when it comes to their careers and livelihood.
The Swiss-American psychiatrist Elisabeth Kubler-Ross created the Kubler-Ross curve. In the world of M&A, the Kubler Ross curve helps describe the emotions employees go through.
At first, employees feel denial which later becomes anger. Coming out of anger is exploration. The final phase is acceptance.
In the denial and anger phases, your employees are looking for reasons to justify their fears.
Any opportunity to contradict what you’re saying creates friction and undermines the transition.
As similar as the two cultures are, you can count on there being differences. But, at the same time, you don’t have control over what the buyer will do.
A successful transition is taking a counter-intuitive approach and predicting cultural differences. You can take it a step further and predict incompatibilities.
In doing so, you can ask for everyone to work together to overcome the differences. In the process, you build trust with your employees.
When it comes to announcing your M&A deal, do you know the phrase that sounds great but never happens in reality?
The Best Of Both Worlds: As Tempting As It Might Be, Avoid Saying This Phrase At All Cost
We gain the strength of the temptation we resist – Ralph Waldo Emerson
When announcing your M&A deal, avoid saying it is the best of both worlds.
Your intentions are genuine and pure. Combing the best of both worlds is also your desire for your employees and clients.
The harsh reality is that combining the best of both worlds doesn’t usually happen. For starters, you have no control over what your future buyer will do or not do.
If you’re honest about it, you know that politics and perceptions influence your buyer. Your employees are strangers to your buyer.
Telling your employees that it’s the best of both worlds fuels their denial and anger. At every opportunity, your employees will find why this situation is not the best of both worlds.
When announcing your M&A deal, avoid two common mistakes most business owners make.
First, most business owners don’t prepare a well-crafted script in advance. Second, business owners who do have a well-crafted script don’t follow it and say things in the moment.
Know that you will feel and hear the pain from your employees. For your employees, you’re riding off into the sunset with your money.
You’re employees feel concerned about paying the mortgage and making ends meet.
Count on making mistakes when announcing your M&A deal. Your mission is to make as few mistakes as possible.
Not saying the liquidity event is the best of both worlds is one less mistake to make.
Speaking of mistakes, do you know another big blunder to avoid when announcing your M&A deal?
It’s Never Business As Usual After A Liquidity Event, So Don’t Say That It Is
Doing what’s right is often the path less traveled – Jeffrey Feldberg
When announcing your M&A deal, never ever tell your employees that it’s business as usual.
A transition after a liquidity event is never business as usual, and your employees know it.
All too often, business owners say it’s business as usual in the heat of the moment. Yet, you’re hearing concerns from people you’ve been in the trenches with day after day.
For many business owners, their employees are like a second family to them. But, unfortunately, it’s all too easy to get caught up in the moment and say things to soothe the fear and pain.
During your liquidity event, what you say can and will be used against you. As the saying goes, you don’t have a second chance to make a great first impression.
In the world of M&A, the currency is trust.
It’s no different when announcing your M&A deal to your employees. Always remember the Kubler Ross curve. Your employees first experience denial and anger.
Count on your employees holding you accountable for everything you say. When announcing your M&A deal, now is not the time to go off script.
Be smart and do the right thing. Be vulnerable with your employees. Acknowledge that it’s not business as usual. Of course, you’d also be in line saying that everyone can expect the unexpected.
When announcing your M&A deal, show that you are both empathetic and transparent.
It’s always better to admit that you don’t know when you’re asked a tough question.
Speaking of fatal phrases to never say when announcing your M&A deal, do you know the next one?
When Announcing Your M&A Deal, Never Ever Say There Will Be No Changes
Change is the law of life. And those who look only to the past or present are certain to miss the future – John F. Kennedy
When announcing your M&A deal, never ever say there will be no changes.
There are always changes when transitioning after a liquidity event.
Your employees expect there to be changes and big changes at that.
When announcing your M&A deal, seize the opportunity to meet employees’ expectations. While you may not know exactly what all the changes will be, you know there will be changes.
Often a transition after a liquidity event is a golden opportunity to make changes.
You know. The changes that you and your team wanted to make but couldn’t for a variety of reasons.
Now is the time to address those much-needed changes. The rules of the game have changed. There is now a new owner for your business, and people expect changes.
It’s all too easy to lose sight of the fact that the business must always come first. Doing what’s best for the business has you keep your customers and provide stability.
What your takeaway when announcing your M&A deal?
First, never ever say there will be no changes.
Second, make those much-needed changes now that there is an expectation for change.
In the long-term, you create a win-win. Both the new business owner and your employees win.
After all, you had a liquidity event to help your business do great things. Now is the time to realize the opportunity through the support of your employees and the new buyer.
Congratulations on having a successful liquidity event!
You have beaten the odds and made it across the finish line. Better yet, here’s to you following the 9-step road map to maximize your enterprise value.
You receiving the money makes it official the liquidity event has closed. But you still have one more thing to do.
What’s the one last thing?
You’re announcing your M&A deal to your employees.
As challenging as a liquidity event is, don’t drop the ball when announcing your M&A deal.
Easier said than done.
There are five fatal things to say when announcing your M&A deal. Although you have received the money, you’re not done.
In your liquidity event, you agreed to reps and warranties from the buyer. In your reps and warranties is a commitment for a smooth transition.
How do you avoid committing the five fatal mistakes when announcing your M&A deal?
In a word, preparation.
At the heart of all five strategies is preparation before selling your business.
The 9-step roadmap helps you prepare. When you’re prepared, you achieve two things.
Part of your preparation is creating a script for announcing your M&A deal.
When you prepare today, you ensure you succeed and prosper tomorrow.
What can you do, and where do you start?
Ensure that your narrative stays away from the five fatal phrases to say when announcing your M&A deal.
Stay with your script, and don’t deviate.
Here’s to you and your success!
Your Raving Fan,