Communicating failed M&A
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Are unsucessful M&A’s in your experience ever communicated (internally or even externally) and non-sucessful? Or ways to publically show the success are found despite the actual outcome?
From what I have seen, when a failed M&A impacts a publicly traded company, it’s hard to keep it quiet. The market is looking for answers regarding poor performance and for adjustments to be made to address the issues. I’ve seen various ways that messages have been spun in initial quarterly reports. However, after a quarter or two, it gets more difficult to skirt around the issue and ask for trust that performance will improve. Certainly when I have read about spinning parts of an organization off, rebranding and changing leadership, or I see people fleeing a company that as acquired in my industry, those are strong indicators that things may not be going well.
It’s far easier for failed M&A to be concealed externally in private companies, particularly due to more limited disclosure requirements. From a public company perspective, failed M&A becomes apparent largely through disclosure obligations, 3rd party analyst scrutiny and ultimately in the performance of the company (and through any declared write-offs or lack of anticipated growth declared upon the deal closing).
In both instances, I think that internally employees usually figure it out regardless of whether it’s formally communicated or not. It likely comes down to leadership decision making and communication style. Communicating a failed piece of M&A can be demotivating for employees and so often some corporate spin is usually devised to explain the lack of success. Often in public companies, employees will be reading about 3rd party observations in the trade press which leaves little room for management to hide tackling the issue head on.
When we state failed M&A, does that mean failed from a transaction standpoint or failed from a integration standpoint? I’ve seen cases where the transaction was successful and the expected revenues were met with the time-frame forecast ed and expected by the market, yet the execution of components of the integration was a failure.
Posting from the position of failure to meet the goals expected not that the transaction itself failed. In my experience, the goals are adjusted to based on whatever the current reality is and communication to that fact occurs.
In my experience (non-listed company), unsuccessful M&A transactions are not communicated transparently. I see a tendency to downplay or even conceal the failure, probably to maintain the company’s reputation or to avoid a negative market perception. Internally, stakeholders ofter receive some level of communication, but only the board fully knows.
When mergers and acquisitions don’t go as planned, companies often share this news internally to align their team’s understanding and strategy moving forward. The way they communicate such outcomes to the outside world, however, tends to be more measured. They’re likely to focus on the positive takeaways or strategic shifts that come from the experience rather than dwelling on the negatives. This approach helps maintain a positive image with investors, customers, and the broader market, painting any setbacks as stepping stones towards future success.
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