Situation: A company is in discussions with a competitor about a possible merger. The CEO seeks advice both about how to proceed with these discussions, and how to communicate the possible merger to staff. How do you merge with a competitor?

Advice from the CEOs:

• Until there is a signed binding legal contract everything must be business as usual.
• Maintaining this attitude provides more leverage as the negotiation proceeds because the company is prepared for either situation.
• If there is a differential in pricing between the company and the competitor, write short term contracts with customers that the company takes from the competitor. This creates the opportunity to revise the contracts and pricing if the merger is completed.
  • This issue begs the question – why do a deal now versus in 1-2 years? If current strategies are increasing the size of the company relative to the competitor, in another 1-2 years the company will be worth more compared to the competitor and will be in a position to complete a deal on more favorable terms.
• At this point, most staff are unaware of the discussions. How is it best to proceed?
  • Consult an HR expert on when to start communicating, what to communicate and how to phrase the message.
  • The trigger to initiate top level staff communications will be the signing of a due diligence agreement.
  • The message to senior management: there is interest but no binding agreement, here’s the deal that’s being discussed. Then just listen to what they have to say.
  • Communications to staff create an important management challenge. Staff will be concerned about their futures and will want to have assurances that these are secure.

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