Did you know that nearly 50% of mergers fail due to poor communication? This stark reality highlights the critical need for effective communication during mergers and acquisitions (M&A). M&A processes are complex and require more than just financial and operational integration. Drawing on firsthand experience from the GlaxoSmithKline (GSK) merger, this blog highlights essential communication lessons relevant to small and medium-sized enterprises (SMEs).
The GlaxoSmithKline Merger: Background
Between 2000 and 2002, Glaxo Wellcome and SmithKline Beecham, two major pharmaceutical companies, underwent one of the industry’s largest mergers, finalized in December 2000. Glaxo Wellcome was recognized for its traditional, research-focused culture and strong scientific expertise, while SmithKline Beecham adopted a more commercial approach, emphasizing market-driven strategies and faster decision-making.
Challenges of Integrating Distinct Cultures
Integrating these two companies presented significant challenges due to their distinct corporate cultures. As the head of corporate communications for GlaxoWellcome Canada and a member of the global communications team, I observed firsthand the friction that arose as teams struggled to align on priorities and operational methods. For instance, Glaxo’s methodical approach clashed with SmithKline’s more agile strategies, creating confusion and frustration during the integration process.
Employee Concerns and the Impact of Insufficient Communication
Employees from both legacy companies expressed concerns about job security, shifts in management styles, and the future direction of the newly formed organization. This uncertainty and resistance contributed to decreased morale and productivity during the integration phase.
A significant root cause of these challenges was compelling internal communication regarding the merger’s vision and strategic direction. While external branding efforts like naming the new company—GlaxoSmithKline—designing a new logo, and marketing to external stakeholders received significant attention, internal communication and alignment were insufficiently addressed.
Relevance for SMEs
Strategic messaging and communication act as the “glue” in a merger, providing stability for internal teams and clarity for the market. Unfortunately, leaders often prioritize abstract “synergies” and vague vision statements instead of addressing what the merger means for employees and customers.
Despite the challenges, GSK –the $76 billion merger, ultimately weathered the storm. However, considering that 46% of deals are delayed, jeopardized, or outright fail due to communication problems, it’s clear that in the high-stakes world of M&A, communication isn’t just a soft skill—it’s a critical driver of success.
Ensuring a Deal Crosses the Finish Line
To enhance the chances of a successful merger, consider the following strategies:
- Start Early: Tailor communications to meet the evolving needs of each stakeholder group, even in the early stages of a deal.
- Create a Detailed Communication Plan: Develop both internal and external communications plans to ensure clarity and alignment.
- Prevent Information Voids: Fill any gaps in communication to avoid leaving room for rumors that can trigger employee attrition and customer churn.
- Craft a Credible Brand Narrative: Develop a compelling story that provides employees with a reason to stay. And create an identity of the new company and its benefits that is relatable to the marketplace.
- Engage with Media and Stakeholders: Maintain open lines of communication with media contacts and community stakeholders to foster goodwill.
- Seek Specialized Help When Needed: Recognize when your company may require
Bottom Line—A deal isn’t just about moving assets from one balance sheet to another.
It’s about moving people forward towards a share future. If you can’t communicate that future clearly you may find there is no future to close on.
