After a brief slowdown in early 2021, M&A deals in the RIA space are back on track for another record-breaking year. And while there are always countless moving parts and priorities in a deal, it’s crucial leaders not overlook a key component to a successful transaction: its communication strategy.
This goes far beyond the required preclose client notifications and formal announcement; the goal of an M&A communication strategy is to show alignment, ensure continuity and to build confidence in the future of the firm. Considering that a growing number of these deals involve large firms with more than $1 billion in assets, a lot is at stake to ensure a smooth transition from start to finish.
M&A Communications: Not Business as Usual
A structured communications strategy is designed to keep all stakeholders informed in a timely and intentional manner that achieves the firm’s objectives. It’s a roadmap to keeping employees engaged and to supporting business continuity with clients, vendors and partners.
Strategy and planning are key, and both parties need to be involved. When two firms combine, there is a significant shift in dynamics and it takes time to find the right path to integration. What you don’t want to happen during this stage is to alienate stakeholders with confusing or vague messaging that feels haphazard or unreliable. Spending some time together to hash out a thoughtful communications strategy can go a long way to mitigating these potential missteps.
Five Steps to Developing an M&A Communications Plan
- Identify the key players who will help craft the strategy and execute the plan. Time is often tight, so the first step is to get down the basics of the deal so that you can put together some talking points for leadership and get the deal announcement drafted. Besides the resources you’ll need to draft and execute, consider the leaders who need to be involved to ensure alignment of the messaging and to report on the most up-to-date information. Typically, this would include an integration leader, representatives from both firms, compliance and executive leadership.
- Identify the process for governance. As these messages are carefully crafted and thoughtfully delivered, so should be your process for review and approval. What checks and balances do you need in place as these messages are reviewed and revised across multiple teams in two different firms? Who has the final say in what is distributed internally and externally?
- Consider each audience and their customized needs for communications. Your internal and external messages, depending on the stakeholders, should be completely customized. Clients need to be retained; your messaging should convey confidence and express the benefits of the deal. Vendors and partners should be notified to ensure continuity, but also to offer insight into future expectations. Employees should receive frequent updates and information about what’s to come, how it may (or may not) affect them and the benefits of staying put.
- Develop your “story.” Every deal has an origin story anchored by a vision of a successful future together. That vision is communicated through core messages that address the rationale for moving forward, including the benefits to staff, clients and the firm itself. It also signals the next chapter for the firm and a departure from the past that will require a significant change to achieve. The story is one of the most important messages that should be delivered by the firm’s executive leaders, and reinforced by its expanded leadership team.
- Anticipate how you will address leaks, rumors and other distractions. If you’ve experienced a merger or acquisition, you know that this time of uncertainty can be both exciting and nerve-wracking. Without proper communications, employees will assess every interaction and every email. Clients may begin looking elsewhere for an advisor if they are feeling uncertain or dissatisfied about the firm’s acquisition. Anticipating these possible outcomes and being prepared to mitigate them quickly is equally important to keeping everything on track.
Setting the Strategy in Motion
Once you’ve created your strategy and identified all of the key players, it’s time to put that plan into motion. M&A communication begins during the due diligence process and continues long past closing. It takes a village to keep the positive momentum on track and to solidify the confidence of your stakeholders. And while things may be hectic at times behind the scenes, a solid communications plan reinforces the message that the deal was well planned, well executed and seamless.
Katie Johnson is president at FiComm Partners and has nearly two decades of experience in the RIA industry. Most recently, she was vice president of corporate communications for Goldman Sachs Personal Financial Management following its acquisition of United Capital.