CNET News: PeopleSoft's board of directors has approved a takeover deal with Oracle worth around $10.3 billion, ending a long-running and bitter battle and creating a major software maker.
What can customers, partners and employees expect to happen next? Will Oracle carve up PeopleSoft, as Oracle's president Charles Phillips said last week which was subsequently denied by CEO Larry Ellison?
Whatever actually happens, the reality right now is that the period of greatest risk to both companies is getting underway - the deal is announced but not yet legally concluded (it's expected to close at the end of January). A key task will be keeping momentum going, in a 'business as usual' manner, and minimizing further fall-out from angry shareholders, worried customers and frightened employees. And all this in an extremely high-profile environment with a continual public spotlight on both companies.
I can say from my own recent experience, when my last employer was acquired by a competitor, effective communication will play a critical role in the success of the acquisition. And let's be honest here - don't call it a merger as has been stated in some media reports. There are no mergers in the software industry, only acquisitions.
Key questions for Oracle's and PeopleSoft's communicators:
Define “The Coming Together Story” - planned or expected synergies by themselves are not a value proposition. You need to have straight answers to fundamental questions such as:
- Why the acquisition: Why is PeopleSoft good for Oracle? / Why is Oracle good for PeopleSoft?
- What advantages would this deal bring to Oracle's and PeopleSoft's employees, shareholders, customers and partners?
- How will this deal affect market positioning?
- What will this deal do to existing product development plans?
- What will happen to Oracle's and PeopleSoft's brands?
In my communication planning during my acquisition experience, one of the planning tools I relied on substantially was a publication from the IABC Research Foundation entitled How Communication Drives Merger Success by Patricia T. Whalen, PhD, APR, Assistant Professor of Integrated Marketing Communications at Northwestern University in the USA.
The guiding principles are best summed up in these two characteristic-definitions from the report:
Characteristics of Most Successful M&As
- Permanent integration team
- Cross-functional integration team with members from both companies
- M&A manual
- Pre-merger cultural assessments
- Checklists of potential problem areas
- Communication strategies that match the M&A motive
- Both formal and informal communication tactics used
- Use of professional communicators
- Consistency between initial promise and implementation
Characteristics of Least Successful M&As
- Discount role of professional communicators – “It’s not rocket science”
- Treat all M&As alike – “If it worked for one, it will work for all”
- Do financial due diligence only – no cultural or systems audits
- Over-use formal communication and under-use informal communication
- Focus mainly on external media and the financial community – not employees
- Put too much emphasis on being fast and keeping the deal secret
- Don’t tailor communication to meet individual audiences’ needs – especially employees
Published in 2001, the 73-page IABC document contains a wealth of invaluable research-based information that will be of enormous help to any communicator in a merger or acquisition situation. You can buy the report online: $45 for IABC members, $160 for non-members.
I strongly recommend it to the corporate communicators at Oracle and PeopleSoft. Actually, I'd bet they have it already.