Coaching Your Employees to Talk to Buyers

As the CEO of a company entering the mergers and acquisitions (M&A) market, preparation is essential. Effective communication with buyers is a significant part of that preparation.

Furthermore, if key employees, such as the CFO, CTO, or high-level product managers, will participate in the M&A process, they must also be ready to discuss their roles with potential buyers. As the CEO, it is your responsibility to ensure they are adequately prepared.

Ineffective communication with buyers can jeopardize deals. Consider the following hypothetical example: A CEO delivers a presentation to a potential buyer. During the presentation, the buyer asks pointed questions. Instead of providing concise, specific answers, the CEO gives long-winded responses that leave the buyer questioning whether the CEO is a good fit.

In another scenario, the CEO invites key employees to a meeting with a potential buyer. During this meeting, the buyer asks the employees questions about perceived gaps in the company's technology. Rather than responding directly, the employees become evasive or defensive. Even worse, the CEO criticizes the employees during the meeting. As a result, the buyer senses a lack of rapport between the CEO and the employees and may wonder, "Is this really a company culture that we want to invest in?"

Coaching for Representation

Your employees represent you and your company to buyers, so their words and behavior matter significantly. Many principles that guide CEOs in presenting the company to buyers also apply to employees when interacting with them. These include:

• Be Professional. Treat buyers with respect and courtesy. Be attentive to their questions and actively listen to what they have to say. Avoid interrupting while a buyer is asking a question.

• Be Succinct. Answer questions directly, clearly, and to the point. Avoid being evasive or overly wordy, and respect the buyer's time. If asked a yes or no question, provide a straightforward answer. If the buyer wants more information, they will ask for it.

• Be Honest. If asked about a negative issue or problem, be truthful. Honesty, even when discussing challenges facing the company, enhances your (and the company's) credibility.

• Be Consistent. Ensure that your statements about the company align with what others (including the CEO) are saying. Buyers can quickly identify inconsistencies, which can undermine your credibility.

• Be Knowledgeable. Be prepared to answer specific questions from buyers related to your area of expertise. For instance, if you are the CTO, you should be ready to discuss the company's technology clearly and concisely. However, if you do not know the answer, do not hesitate to say, "I don't know," followed by "I'll get back to you with an answer." Authenticity is key.

• Be Culturally Attuned. In cross-border M&A deals, it is crucial to understand significant cultural differences. Some cultures emphasize hierarchy, requiring respect for status in business relationships. For example, in meetings with a buyer's team from Japan, it is essential to recognize who to engage with. Japanese individuals often prefer to speak with someone they consider their equal. Also, be cautious with gestures; for instance, a thumbs-up, which is positive in American culture, can be viewed negatively in other cultures.

Coaching for Due Diligence

Due diligence is a vital phase in the M&A process, making it essential to prepare your key employees effectively. Here are some ways to prepare them:

• Bring Employees Up to Speed. Inform employees involved in the due diligence process about the specifics of the deal, including who is involved, what it entails, and the reasons behind the M&A transaction. Provide an overview of the timeline and schedule for the due diligence efforts.

• Create a Due Diligence Checklist. Develop a comprehensive checklist that outlines everything the buyer will examine regarding your company before agreeing to a sale or merger. Ensure that designated employees understand the checklist and any associated requirements.

• Protect Confidentiality. Restrict information about the M&A to only those employees who require it. Employees involved in the due diligence process should be aware of the plan for safeguarding sensitive information. Please note that confidentiality is essential throughout this process. Some companies will implement a non-disclosure agreement (NDA) during the merger and acquisition (M&A) process.

• Preparing the Data Room. A data room is a secure physical or virtual location where you, as the seller, store essential documents needed during the M&A process. First, identify the employees responsible for gathering the critical documentation to be included in the data room. Then, ensure that appropriate access is managed for the buyer's staff or representatives who are essential to the transaction.

Coaching for Cohesion.

The way you interact with your employees during meetings with potential buyers can significantly impact M&A deals. If there is a noticeable lack of alignment between the CEO and the employees, it could jeopardize the deal. The seller's team must be cohesive and supportive of one another when dealing with buyers. Buyers are inclined to enter an M&A agreement if they see growth opportunities, but they also need to feel confident that the deal will result in a good cultural fit. The perception of how the selling company's CEO and employees engage with one another is a key aspect of company culture as viewed by the buyer. As a CEO, you need to ensure that this perception is positive.

Why Coaching is Important.

Keep in mind that the seller's goal in an M&A transaction is to achieve the best possible outcome, whether it's an attractive liquidity event or a mutually beneficial partnership for growth. The employees you involve in the M&A process are crucial allies in achieving that goal. Therefore, effective coaching is essential.