Our recent Buyers Research Report revealed some sobering probabilities of success when it comes to securing a buyer for your consulting firm. Buyers said on average that 82% of potential deals do not progress to a signed Non-Disclosure agreement and only 9% of the remainder get as far as Letter of Intent.
To be one of the 200 consulting firms sold across the globe per month, it is essential to mitigate inherent risks to improve the chances of a sale. Consulting firms are built on the skills and talents of people, therefore, employees wield considerable influence over the value of your firm. A buyer will assess the cultural synergy of a firm through its people. It is important not to underestimate the impact of communicating a merger or acquisition to them, especially as a means of gaining good will and buy-in internally.
During the sales process, the performance of your firm cannot be compromised under the scrutiny of due diligence. If growth is compromised, a buyer could have second thoughts on a deal. This means you will rely on employees to deliver and even, at times, go above and beyond their duties. So how you communicate with them can be the difference between employees becoming valuable allies or costly foes.
No two consulting firms’ circumstances are the same. Assessing what information to provide is a balancing act. Strive to give enough information so people feel in the loop, but not too much that should things change, as often they do in M&A proceedings, you could not be accused of causing unnecessary disruption to your business.
You absolutely want to avoid creating a grapevine effect, where information is passed around informally. These Chinese whispers inevitably lead to the miscommunication of key facts triggering confusion and anxiety. And this can have a knock-on effect with productivity and engagement.
So your judgement is key. Strong leadership, especially in times of change is essential to keeping people onside.
Neil Taylor is managing partner at business language consultancy, The Writer, and author of Brilliant Business Writing. He would say ditch business jargon if you want to win hearts and minds. ‘Write and speak like a normal human being. Being honest and engaging is just as important as being businesslike. Think about your people: what do they care about? If you know they’ll think, ‘what does this change mean for my job?’, come straight out with that. The temptation is to communicate the whole rationale for change, but people are much more likely to take that in if you’ve already acknowledged how they might be feeling.’
Taylor always advises to keep an eye on length of communication, ‘Don’t feel you have to go on and on. It’s much more confident to say what you’ve got to say, and shut up. And think about where they’ll read or hear it. On their mobile? Better make it even shorter, then.’
Some points to consider:
- Assess they types of people your staff are and put yourself in their shoes. What would a deal mean to them? Try and anticipate how they might react and what questions they may have
- Think about how to paint the big picture and acknowledge the role they have in it. Don’t assume your vision is obvious, you need to articulate it clearly
- A regular communication schedule can be helpful, even if it only involves a holding statement. Think about how communications should be delivered; is it best face to face or over email?
In conclusion, keeping your business growing through the M&A process is essential. Deals can take anywhere between four to 18 months. If financial performance suffers during the process, buyers may be deterred from completing a deal. It is therefore imperative that you keep focussed on running and growing the business through the sales process. Achieving this will be down to your consultants and staff, so handle them with care.