The M&A process can be very stressful for everyone involved, whether they have an active role in the transaction or not. As the executive team is busy juggling relationships and paperwork, company employees are usually worried about whether they will still have a job once everything is said and done. If a company is not careful with how it conducts the process and communicates with its staff, morale and productivity may take quite a hit during the transition.
For this reason, the role of middle managers during an M&A transaction is incredibly important. Unfortunately, their ability to facilitate the deal is often overlooked, as they are responsible for keeping things afloat while the details are sorted out, and thus they are not always a part of the larger conversation. Companies must ensure that they are utilizing their middle managers during any deal keeping in mind the following:
More than likely, the middle managers at a company that is in the process of being acquired are hoping to remain gainfully employed subsequent to the closing of that transaction. Granted, there may be cases in which that will not occur, but unless there is a generous severance or buyout situation, the prospect of a layoff will not sit well. Of course, if those individuals’ future employment rests on their performance before, during, or after the deal, they will likely want to do whatever is necessary to please their new bosses.
Ultimately, it is important for company leaders to ensure that the firm’s middle managers know where they stand and that they are included in the process, as appropriate. In order to even get the deal done, the middle managers will be the ones responsible for ensuring that operations are maintained as normally as possible to avoid any disruptions, and keeping them in the dark certainly won’t help matters. The middle managers must continue to feel invested in the company, so that they are committed to realizing the best outcome for everyone, and this can only occur if they are kept in the loop.
Of course, in addition to understanding their own role and future with the company, the middle managers are the key intermediaries between the leadership team and the company workers. As a result, they must be given some information that they can pass along to the employees, as they will no doubt be the recipient of a lot of questions, comments, and concerns. Obviously, it is important for the middle managers to convey information to employees with respect to some of the basic details of the deal. But, they must also be called upon to keep employees engaged and motivated, and their ability to influence must not be underestimated.
And, the middle managers can also serve as a conduit from the employees to the leaders. There may be aspects of the employees and employment relationships that will affect the terms of an M&A deal, and thus it is important for leaders to have a sense of how things are going in different departments. Essentially, the middle managers must be viewed as the influential intermediaries that they are, and thus the ones who can really help foster the deal.
In the Trenches
Middle managers can provide a lot of insight about a company’s status that goes beyond the numbers-based evaluations on which leaders tend to rely. M&A transactions can be quite tricky as the information that is furnished during the actual due diligence investigation may later fluctuate. Sometimes, these changes will not be captured in a formal accounting instrument until later in the year, which may prove problematic if they surface before the deal closes and happen to impact the terms that were struck.
Because middle managers have the strongest sense of the actual day-to-day operations, they can pass along important pieces of information. However, this will really only be valuable if they know the sort of things to which they should be paying special attention. Thus, leaders must remember that it is the middle managers who are in the trenches and therefore in the best position to communicate any issues that may affect a pending M&A transaction.