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This issue of Communication Command contains an interview about the role strategic communication plays in mergers, acquisitions, and divestitures, as well as an article on crisis preparedness. We hope you will enjoy our e-Newsletter.

March / April
2015
WCDM
 Presentation
C4CS® Managing Partner Oliver S. Schmidt has accepted an invitation to conduct a three-hour workshop on Effective Risk Communication in Times of Crisis at the 25th World Conference on Disaster Management #WCDMgives. The conference will be held June 8 - 11, 2015 in Toronto, Canada and is expected to attract attendees from several dozen countries. This will be Oliver's fourth presentation at a WCDM. He has previously presented on Effective Employee Communication in Times of Crisis, Effective Media Management in Times of Crisis, and Effective Use of Social Media in Times of Crisis.
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Free Consultation
Please contact C4CS® at info@c4cs.com in regard to a free consultation concerning your organization's strategic communication and crisis management needs.
Leadership Institute
C4CS® Senior Partner Dianne Chase was appointed Vice Chair of the 2015 IABC World Conference ( and attended IABC's Leadership Institute in Orlando, Florida in February.
 
TRPRC Media Skills Workshop
C4CS® recently conducted a Media Skills Workshop for members of the Three Rivers Pollution Response Council (TRPRC). The workshop included segments on the Role of the Mass Media, Media Interview Preparation, Reporters' Techniques and How to React, etc.
Please contact us at info@c4cs.com if you would like to have a senior member of C4CS® make a presentation for your organization.
 
Our next e-Learning course on 'Harnessing the Power of Social Media in Crisis Management' will be conducted April 13 through April 24, 2015. Congratulations to those who completed the course work and obtained a Certificate in Social Media Crisis Management Planning accredited by ICOR. The course brochure can be downloaded via this link.
If you have questions concerning our e-Learning course, please contact us at training@c4cs.com.

 
Communication Command e-Newsletter
Please click here if you would like to access past issues of our e-Newsletter.

 
Five Questions about the Role Strategic Communication Plays in Mergers, Acquisitions, and Divestitures


Mark Stabile is Executive Vice President of Pittsburgh based law firm Cohen & Grigsby, P.C. and Chair of its Business Services Group.
 
Mark Stabile

You specialize in negotiating and structuring mergers, acquisitions, and divestitures. What made you decide to focus your law practice in this area?

A well-planned and well-executed mergers and acquisitions (M&A) transaction should be a success for all parties. The seller achieves liquidity and perhaps also receives an investment in the buyer, and the buyer acquires a key component for future growth or a platform upon which to build a new business line. I have been an M&A lawyer for more than 20 years. When I began my career at a large law firm in Washington, DC, my practice was focused on litigation, including complex commercial litigation as well as financial fraud and violations of the securities laws. Although that practice was quite interesting and often involved high profile, headline-grabbing matters, from a professional and personal perspective, I found that I was not well-suited for an adversarial practice in which the result was almost invariably defined by binary options of either "winning" or "losing".

When I returned home to Pittsburgh in 1993, I was fortunate to have the opportunity to join the growing business transactions practice at Cohen & Grigsby. Although there is no doubt that an M&A lawyer acts as a strong advocate for his or her client's positions, a good M&A lawyer also keeps in sharp focus the client's goal – closing the transaction. As a result, although the negotiation of a transaction may be contentious at times, when compared with traditional litigation, an M&A practice is characterized by a much more collaborative and cooperative spirit. In addition, a merger, acquisition or divestiture almost always commands the attention of senior representatives of the client, which can include top executive officers and principals, and in many private company transactions, the business owners themselves. I have hence found it quite rewarding to work with clients on transactions that inevitably are transformative in some manner for the client's business and often the client's personal lives as well. 


What steps does the process of buying or selling entail and which external experts do you recommend your clients work with in addition to legal counsel?

As with many worthwhile endeavors, preparation is key. A well-advised seller will assemble a team of external experts early in the process to prepare the company for sale and to prepare the seller and its constituents to manage the sale process. This team almost always will include experienced legal advisors, accountants and auditors, and investment bankers or other financial experts. The nature of the company and its business also may dictate retaining various specialists including environmental consultants, information technology or employee benefits advisors. In addition, most sellers will want to consider at the outset bringing in strategic communication experts to develop a comprehensive internal and external communication strategy.

Before contacting a single prospective buyer, I advise sellers to "think like a buyer": anticipate and prepare for questions and information requests that likely buyers will submit, assemble and organize relevant business and legal documents, develop a realistic and justifiable range of value for the business, eliminate or mitigate potential "surprises" that a buyer otherwise might uncover and use to erode transaction value, and ultimately develop a strategy to execute upon the transaction and closing process.

For the buyer, the team assembled will be similar to that of the seller, although the buyer's transaction process obviously differs. In a competitive process with multiple potential buyers, preparation is no less important for the buyer than it is for the seller. The buyer also needs to consider from the outset the integration and operational challenges as well as the potential need to communicate and "sell" itself as the right partner for various constituencies, including the seller's employees, vendors, and customers.

A typical middle market private company acquisition can take between 45 and 90 days after a buyer has been identified. For the seller, the preparation, data gathering and marketing before buyers are contacted can add at least 45 to 90 days to the process. The transaction process itself can take many forms, from a negotiated transaction between a seller and a buyer identified without seeking competing bids to a broad auction process managed by an investment banker in which more than one hundred potential buyer are contacted. In most cases, the first step in serious buyer-seller discussions is the execution of a confidentiality and nondisclosure agreement. With the parties committed to confidentiality, the discussions proceed to the preliminary negotiation of fundamental deal terms: purchase price, form of payment (cash, stock, installment payments, earn-outs, etc.), important conditions that must be met for the transaction to close (such as the approval of significant customers, employment agreements with key employees, governmental approval or the ability for the buyer to obtain financing), and transaction timing. These deal terms often are reflected in a letter of intent that generally is non-binding other than the obligation of the seller to negotiate exclusively with the buyer for a specific period of time. Following the execution of the letter of intent, the buyer continues its legal and financial review of the target business while negotiating the definitive legal documents, planning for post-closing operation and integration and ultimately proceeding with the closing.


How important is effective external and internal communication throughout the process of buying or selling from your perspective?
 
Managing the "message" behind a transaction, both internally and externally, can be vital both to the short term and long term success of the transaction. If the parties do not take the initiative to communicate and control the message to external and internal stakeholders, rumor and misinformation quickly will fill the void. In the short term, the team executing the transaction should have a clear understanding of their roles and the rationale for pursuing the transaction so that each can perform his or her role in a manner consistent with the overall corporate goal. In the longer term, particularly for the buyer, a consistent expression and frequent articulation of the mission and vision for the transaction, which can and should evolve as plans are tested by experience, will help to mitigate a loss of focus when the rush to execute the transaction has faded.

In many cases involving private company M&A transactions, the transaction is not announced to external stakeholders until the transaction closes. Development of a communication strategy that is tested and prepared for launch immediately at the closing is imperative. However, it is also important that a strategic communication plan be developed in case word gets out before the official closing.

Consider the example of a strategic acquisition by a company entering a new but complementary line of business. Perhaps the founder of the acquired company is nearing retirement but plans to remain with the company to oversee the transition and also plans to reinvest a portion of his or her sale proceeds in the combined company. In this case, both the buyer and the seller have a strong incentive to be prepared immediately upon closing to communicate with key vendors and customers. I recall a transaction such as this in which a very detailed communication strategy was developed, rehearsed and implemented with great success. In this case, detailed talking points and scripts were prepared and refined with the cooperation of both parties and their external communications advisors. Drafting and timing of press releases also was carefully controlled. External stakeholders were identified, prioritized and the top executives of the buyer and the seller each were assigned contacts to communicate with either by phone or in person concurrent with the public announcement of the transaction. This type of planning easily can be lost among the myriad of other essential legal, financial and commercial details that must be orchestrated if the transaction is to close as and when planned. When executed properly, however, the good will of the combined businesses not only is preserved but enhanced.


Which stakeholder group is often the most difficult to communicate with during a merger or acquisition and why?

Internal and external stakeholders present their own unique challenges.  Internally, communication with employees requires a particularly deft touch. Whether you are the acquirer or the seller, an M&A transaction inevitably can create anxiety, distraction and stress for affected employees. The strategy to communicate the transaction must further be tailored to particular employee groups such as executives, middle management, and hourly employees.  In many cases, the impact of the transaction on certain employees does not become clear until late in the transaction process, and the communication strategy must be developed carefully so that it is candid without conveying either undue optimism or pessimism. On the other hand, where it is clear that certain employees or employee groups are essential to the success of the transaction, the communication (and compensation) strategy must be developed to foster "buy in" and retention of key players.

Externally, customer relationships often are most difficult to manage. Change is never easy and in many M&A transactions, it is not appropriate or accurate to communicate to customers that the result will be "business as usual". If the buyer expects to replace key customer contacts, migrate to new brand names or product designs, consolidate locations or otherwise change the buying experience, even if there are sound and positive strategic rationales for such changes, the customer communication may be particularly difficult to manage. In these cases, the parties must develop well in advance of the public announcement a well-articulated communication strategy that includes multiple "touches" and an extended timeline. In one transaction with which I was involved where this kind of customer communication was required, after the initial public announcement and initial written or telephone communication with key customers, the top executives of the buyer and the seller embarked on a two week "road trip" to meet personally with key customers. These meetings were carefully planned and the communications were neither random nor "off the cuff". Instead, presentation scripts and printed materials were developed to support a carefully constructed customer-facing message to support the newly combined company relationship.


Do you think Executive Communication Coaching can help senior managers improve their M&A related communication with stakeholders including journalists and employees?

Particularly in those companies for which an M&A transaction is only an occasional or perhaps a once in a lifetime event, I believe that outside professional assistance concerning strategic communication can directly enhance transaction outcomes. Often the basic blocking and tackling involved in an M&A transaction can overshadow the development and execution of a coordinated strategic communication plan. Key executives can be caught up in the negotiation of the financial and legal terms of the transaction as well as evaluating and planning for the disposition or integration of an ongoing business, all while attempting to avoid a loss of focus on the day-to-day operations of the business. As a result, preparation for communication with the media, employees, and other stakeholders can be left to the last minute and may fall short. Delegating these important tasks and retaining outside professionals to enable effective change communication planning and implementation can ensure that strategic internal and external communication receive the level of attention that is commensurate with their impact on the short term and long term success of the transaction.

Senior managers who may benefit from one-on-one executive communication coaching are well advised to spend a few hours with an expert for instance in order to improve their on-camera media interview skills or to plan for and rehearse message delivery in regard to an important employee meeting. The investment will be worth it.

Crisis Preparedness: Crisis Communication Readiness Assessment
 
As part of our strategic communication and crisis management consulting, C4CS® conducts crisis communication readiness assessments to determine how well a client partner is prepared to communicate effectively during a company crisis.

The following questions are included in the questionnaires our client partners complete.

1) Does your company’s crisis management planning, testing and response follow clearly defined guiding principles that have been communicated throughout the organization?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
2) Does your company conduct recurring Vulnerability Audits that are geared toward identifying risks that may result in a crisis?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
3) Does your company utilize a technology-enabled Incident Notification System?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
4) Does your company utilize a software-based Incident Management System?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
5) Does your company employ a customized and regularly updated Crisis Management Plan that includes realistic crisis scenarios?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
6) Does your company employ a customized and regularly updated Crisis Communication Plan that includes a Social Media component?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
7) Does your company utilize Crisis Management Teams and Crisis Communication Teams at the corporate, regional and local level?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
8) Do your company’s Crisis Management and Crisis Communication Team members and their designated backups have access to relevant resources (equipment, information, training, etc.)?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
9) Does your company utilize centrally located and appropriately equipped on site and off site Crisis Control Centers for Crisis Management and Crisis Communication Teams to work from?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
10) Does your company utilize appropriately equipped on site and off site locations for the designated Crisis Management and Crisis Communication Team members to conduct media briefings and news conferences?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
11) Does your company regularly identify and train speokespersons who will address the media and other stakeholders during a crisis?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
12) Do your company's Crisis Management and Crisis Communication Team members participate in recurring crisis drills?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
13) Does your company employ crisis logs and evaluate past crisis incidents in order to better manage adversity in the future?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
14) Does your company have an Internet & Social Media Monitoring solution and an Issues Management process in place?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
15) Are your company’s managers trained in Presentational Communication and Risk Communication?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)

16) Does your company proactively work with traditional news media and social media in times of crisis?
1          2          3          4          5         
(1 = not at all; 5 = absolutely)
 
17) How would you describe your company’s relationship with the traditional news media and social media?
1          2          3          4          5         
(1 = poor; 5 = excellent)

18) How likely is it that your company will publicly acknowledge responsibility in times of crisis?
1          2          3          4          5         
(1 = least likely; 5 = very likely)

19) How likely is it that your company will proactively involve relevant stakeholders during the crisis response and crisis recovery phases?
1          2          3          4          5         
(1 = least likely; 5 = very likely)
 
20) How likely is it that your company will not only survive a crisis, but emerge from it as a stronger and more successful organization?
1          2          3          4          5         
(1 = least likely; 5 = very likely)

If you would like to discuss your company's crisis communication readiness, please contact us at info@c4cs.com. We look forward to hearing from you.

Food For Thought

“If the public thinks you have a problem,
you do have a problem.”


Samra Bufkins




 
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