Trust and Transparency: the T&T of M&A
They say that candor is refreshing. In M&A negotiations, it can be a blast of pure oxygen. Let me tell you the story.
I was with a selling client during the first visit by a potential buyer and his team. The buyer understood the sensitivity of situations like this: strangers in the plant, guys in suits walking around, nervous questions from everybody. He asked my client straight out: “Who do your employees think we are, and why do they think we’re here?”
My client replied, “Everyone knows who you are and why you are here. We let our team know that this would happen eventually. Being open about everything is just a part of our culture.”
Well, the buyer was surprised, but the effect on the discussions that followed couldn’t have been more positive. Not only did the buyer personally appreciate the seller’s frankness—he also saw in it a powerful clue to the seller’s business integrity. An owner this trusting of his employees—enjoying their trust in return—probably could be counted on to deal with a buyer in the same good faith.
The seller’s management presentation to the buyer was no different. He included not just his sales representatives and senior people, but mid-level employees who typically aren’t asked to take part in meetings of this kind. It was all by way of assuring the buyer that transparency was SOP in this company and that there would be nothing to blindside any employee affected by a deal.
Admittedly, this degree of openness is unusual in printing businesses preparing themselves for sale. All M&As are sensitive, and there can be many good reasons for sharing information only on a strict need-to-know basis while negotiations are under way.
A little knowledge, after all, can be a dangerous thing. Employees with an incomplete understanding of what’s going on may spook themselves into leaving, taking years of valuable experience with them. Ill-timed rumors reaching customers and suppliers can threaten those relationships. If 100 percent transparency like my client’s isn’t present in other companies, it implies no criticism of anyone in charge. What my client does is just a different and very refreshing approach to running a printing business in an extremely competitive marketplace.
Communicating with total candor means that when it’s time to let everyone know that a sale is pending, the sunshine of the way you customarily operate will keep dark clouds from gathering over the discussion. But, even if you need to play closer to the vest for the good of all concerned, there’s still a message to be heard in my client’s frank disclosure to the buyer.
In M&As, good faith is everything, and it begins with your everyday outreach to the people who work for you. Keep on finding opportunities to let them know that you value their contributions and that you have their backs today and in the long term. That way, when the time comes to share your plans with the workforce as a whole, the things you’ll want to say most will go without saying.
About New Direction Partners
New Direction Partners (NDP) is the print and graphic communications industry’s leading provider of advisory services for firms seeking growth and opportunity through mergers and acquisitions. NDP assists its clients by giving them expert guidance and peace of mind at every stage of the process of buying or selling a printing company. Services include representing selling shareholders; acquisition searches; valuation; capital formation and financing; and strategic planning. NDP’s partners have participated in more than 300 mergers and acquisitions since 1979. Collectively they possess over 200 years of industry experience with transactions in aggregate exceeding $2 billion.
For information, e-mail email@example.com.