10 Strategies for Healthcare M&A Success

Healthcare merger and acquisition (M&A) activity is expected to increase in 2011, which means that many executives will find themselves managing a merger or acquisition as part of their competitive strategy. Mergers and acquisitions are pursued to provide benefits such as increased financial strength, expanded market presence, improved efficiencies and new capabilities.

Yet the majority of M&A transactions fail to produce the desired financial and strategic results. What’s missing? Despite the millions of dollars that are spent on a typical deal, most M&A transactions occur with minimal strategic communications planning to make the deal a success.  In fact, M&A communications are often an afterthought and executed hurriedly just before the transaction closes.

Over the last several years, many deals have performed poorly in large part because the acquirers did not effectively tell their story or successfully integrate their organizations once the deal closed.
One key to success is how companies and healthcare organizations communicate about the transaction both internally and externally. The M&A team must actively engage key stakeholders such as employees, customers/patients, board members, shareholders, the community and others with relevant messaging that addresses each audience.

M&A communications involve communicating simultaneously with several audiences who each have their own interests, concerns and information needs. Due to the complexity of mergers and acquisitions, they require a Strategic M&A Communications Plan with a well-defined message strategy for each stakeholder group and carefully choreographed information delivery timelines.

The M&A lifecycle includes four phases of communications:

1. Pre-close
2. Day one announcement
3. First 100-day transition
4. Integration

Strategic communications planning should begin in the pre-close phase to carefully orchestrate the day one announcement in order to make a positive first impression and clearly establish the vision for the future. The first 100-day transition phase is an active period of change management that focuses on helping employees quickly let go of the past and start moving forward toward the future vision. The transition and integration phases require proactive communications to help employees understand their roles; effectively transition to new policies, systems and procedures; and move forward toward specific goals.

Ten Keys to M&A Success
There are ten fundamental communications best practices that companies and healthcare organizations can use to boost the success of their M&A transactions:

1. Develop a Strategic M&A Communications Plan—A strategic M&A communications plan should be developed during the pre-close phase to detail the communications milestones, message strategy and delivery timelines for the primary stakeholder audiences. All communications must be carefully planned and timed to provide the right messages at the right time to manage operational change, reinforce the future vision and clearly articulate the value of the transaction.
2. Appoint an M&A Communications Team—The M&A communications team will be responsible for the day one announcement orchestration and training the department-level managers to handle employee questions and concerns once the deal announcement is made. The team must be trained and equipped with communications tools.
3. Choreograph the Day One Announcement—The day one announcement should be planned out hour-by-hour and tightly choreographed. The transaction should be announced to each stakeholder audience at a scheduled time using prepared presentations and handouts.
4. Develop a Brand Integration Strategy—A brand integration strategy can help position the new combined organization to the marketplace in a manner that builds value.  When multiple brands (organizations) are combined, the brand strategy must be clear to avoid brand confusion. Brand integration decisions send definitive signals about the direction of the new combined organization to both internal and external audiences.
5. Involve and Prepare The Executive Team—Department leaders will be on the front line after the announcement is made to answer questions and address concerns of employees and customers who turn to them for the “real story.” Be sure managers have the information they need to confidently communicate the direction of the organization to their direct reports by providing the appropriate communications training and tools.

6. Keep Communications Clear, Consistent and Honest—Providing clear, consistent and honest communications is critical during a merger or acquisition. In the early stages of the transaction, many decisions will not be made yet.  Other information might need to be strategically withheld until the right time. In this delicate situation, it is best to be honest and admit when decisions are still in process than to provide answers that might appear deceptive later.
7. Empower Interaction and Feedback—Providing online feedback mechanisms for employees and customers/patients empowers two-way communication that fosters healthier relationships during the M&A transition and integration phases.
8. Communicate Value to Customers—Customers/patients must understand the value of the transaction, and be assured there will be a seamless transition with no disruption in service. It is important to immediately engage customers/patients and to leverage the deal to build even stronger relationships.
9. Deliver Proactive, Ongoing Communications---Communications should not stop after the announcement is made. Proactive M&A communications are needed to transition the organization as decisions are made throughout the integration lifecycle. 
10. Measure and Report Results—Employees function best when focused on specific goals. Be sure to measure the results of short-term and long-term initiatives, and keep the organization informed about the status of the Integration process to keep it moving forward.

A Clear Roadmap for Integration and Value Creation
When M&A communications are strategically executed, acquirers are able to clearly articulate the value of the transaction, proactively anticipate and address stakeholder concerns and precisely deploy communications to the right stakeholders at the right times to accelerate integration. As a result, organizations executing an M&A strategy should seriously consider making communications an integral part of the deal planning process and a mandatory line item on the budget to protect their multi-million dollar investments.

Ideally, M&A communications experts should be brought in as early as possible to understand the transaction and strategic benefits so they can begin crafting the Strategic Communications Plan and creating the communications tools needed to make the transaction a success. This proactive planning provides a clear roadmap to achieving the financial and strategic goals of each transaction, and puts the acquirer in the driver’s seat.

Tami Hernandez is president of Venturis™, a strategic M&A communications organization. She can be reached at thernandez@venturisinc.com.