With truckloads of cheap money sloshing around and all those skiing trips to Aspen cancelled, Australia’s investment bankers and corporate lawyers are busier than ever. Yes, we are in the middle of an M&A boom.

In the past three months alone there’s been Afterpay’s record-breaking $39 billion acquisition by Square, the $40 billion merger of BHP’s and Woodside Petroleum’s oil and gas assets, Santos’s $9 billion bid for Oil Search, and Seven Group Holding’s $8.8 billion takeover of Boral.

With interest rates low, potential bargains to be found among businesses that have struggled during the Covid 19 pandemic, and firms keen to capitalize on technological changes, there’s plenty more mega M&A on the way.

Leading the charge is the $23.6 billion takeover bid for Sydney Airport from Sydney Aviation Alliance while Brookfield and APA Group are locked in a $9 billion-plus battle for AusNet Services. And that’s just for starters.

Mergers and acquisitions are big news – not only for the companies involved but their employees, for clients and of course, for the media.

Bidders (and targets) without a clear narrative, a solid business rationale and an understanding of key stakeholders tend to struggle, despite the offer price and talk about premiums.

Success will often depend not just on what’s on offer in terms of cash or shares, but on how the offer is perceived by investors, customers and clients, regulators and, in some cases, local MPs.

Here are some tips to keep in mind for a smooth transaction:

1. Tell a compelling story

  • In other words, you need to develop a clear communications plan, with concise and consistent messages.
  • You need to identify all your key stakeholders – beyond shareholders.
  • And you need to set out a clear timeframe to share information.

2. Keep your employees in the loop

  • No matter how big or small the M&A deal, the key to a successful transition is keeping your employees engaged and informed to maintain productivity and reduce uncertainty.
  • Employees are your best brand ambassadors but if they don’t know what’s going on, they could do serious damage in various ways, particularly when talking to customers
  • Explain why the transaction is occurring, and be honest about any bad news such as redundancies/site closures.
  • Provide regular updates to avoid an information vacuum and low morale developing.
  • Outline any changes to the business’s systems, policies or processes that will happen as a result of the transaction.
  • And guide them on what they can they say to customers and clients, which means deciding who will deal with major clients/suppliers and what should be said.

3. Winning over the watchdogs and worriers

  • Even when the offer is compelling and your Board has agreed to the deal, transactions can hit a wall on regulatory or political issues.
  • Take for example Hong Kong-based CK Group’s $13 billion bid for APA Group, which was rejected by Treasurer Josh Frydenberg in 2018 amid concerns such a deal would deliver control of Australia’s major gas transmission business to a foreign company.
  • So, ask yourself: Are there any likely regulatory issues that could result from the transaction; if so, decide when to notify the regulator, and have a communications management plan in place.
  • Just as importantly, ask whether the transaction is likely to be contentious with shareholders, local politicians, unions, or environmental activists? If so, how will you minimise the impact of any negative campaign?

While getting the price right is key in any M&A, having a robust communications plan that clearly sets out the strategic rationale to your employees, clients, regulators and other interested parties will help secure the path to success.