Nov 20, 2017

Communicating Divestment, Acquisition or IPO

Key points to consider in aged care IPO communications.

For years now, corporate activity in the Australian aged care sector has been vigorous.

Acknowledging the natural exuberance of business owners, boards, investors and executive teams, let us consider with a level head, the range of emotions that this activity elicits in all stakeholders near to the business and further afar. Furthermore, let’s consider the best communication strategy for responding to all stakeholders remembering that when corporate activity accelerates, emotion drives markets.

Perceptions of value

A red car is worth more than a white one. 

Companies considering a public listing, sale or acquisition often focus communications on the day of reckoning. However competitors, potential investors, the media and regulators are paying attention long before the stock begins trading or the due diligence is underway.

The executive team needs to invest in defining and articulating the company’s competencies – its people, systems, accolades, product innovation, intellectual property, balance sheet and physical assets – well before the key event. The brand identity, manifest in visual presentation, leadership narrative and communications, needs to be clean and compelling. Public relations activities are a priority as a network of influential people and institutions act as critical endorsers of the company’s intentions and management capabilities.

So important, but so often overlooked, is the need to have the company’s employees and customers advocate services and competencies. Investors, partners, and employees are all very wary of a well-crafted company message. They trust their peers and people inside the company more than they trust its official communications.

You are building an accurate and very clear picture of a company or a unison of immediate and near term value. You are at the wheel; investors and key stakeholders are riding shotgun. What do they see ahead?

Take everyone with you

One vision, different views.

This is a pivotal moment, one that promises to transform the company. Good communication strategists will distil the potential into a strong central story. However, like the developer and the conservationist looking at a green field, opportunity can be very different things.

Employees are rightfully wary of step change. On all the M&As I have been involved with over the past two decades, key managers have exited the business. The reasons are varied: not waiting to be pushed, competitive tension with incoming leadership, an opportunity to try something new or earn more elsewhere. When key managers leave – or when business owners who were the engine of performance and growth in an acquired firm achieve a long held objective to take the foot off the accelerator – there is always an immediate impact on the business that, if not prepared for and mitigated, will erode value and be perceived by stakeholders as instability. Instability is the white ant of promising mergers, acquisitions and IPOs. Employees leave, markets get nervous, investors sell out. We must never forget that in service businesses, managers and employees represent value.

When planning communication pre-corporate activity, empathy map every stakeholder. In their shoes, ask questions and consider the answers. This is personal: who should be engaging with each individual? When and how?

In the rush to secure board, regulator and investor support, particularly when media relations is tactic, the corporate benefits have to be spruiked alongside employee benefits. Astute investors will look for employee engagement that encourages dialogue in advance of corporate activity.

Consumers are also watchful of change. Consider the public dialogue surrounding the listing of Medibank or the future of Australia Post and the tactics of competitors. Shifting insurers or postal services is very easy to do. There are no long term contracts.

If customers see employees being treated unfairly, a failure to maintain the company’s purpose, activity unaligned to the brand promise, or evidence of cost cutting that deteriorates customer value, a significant number will walk. For those acolytes of NPS: promoters become detractors within days of negative media coverage.

Facts do very little to offset the impact that a personal story of pain, loss or outrage has on customers when it runs on the front page or news feed.

Delivering on the promise

Be careful what you wish for – it may (not) come true.

Those who have closely watched the float of aged companies over recent years have witnessed investors get the jitters and run in the months following the listing.

Not achieving the outcomes you communicated and not communicating the outcomes you have achieved amount to the same thing in the minds of early investors. They are aware of the risks and they are prepared to parachute at the first sign of smoke.

Communication leading into corporate activity needs to extend over 24 months because pre-IPO or merger activity will become public months before the act; any last minute face lifts of websites, rebrands and changes in message reek of opportunism, spin and obfuscation. Sow’s ear, silk purse.

Assuming solid fundamentals for the activity, there is no need to oversell, to ‘market’. This is a public relations exercise in its classic sense: ensuring all publics are aware of the competencies of the business, the calculated outcomes, the near term plans and the risk management measures in place.

It is not about setting the bar low (oversubscription is a goal). It is about being authentic, and communicating targets along with the possible variables and contingencies to manage transition and growth.

Good managers will sense change before it is announced. It is therefore best to plan communication, personalise briefings, and be as honest as possible about implications good and bad. Solve the issues before the merger, listing or acquisition. Keep good people engaged and motivated; give the business time to recover from any losses of key staff.

Never fail on purpose

Everything is relative.

In the health and aged care sectors, there is a very human outcome of the work companies do. It’s why the job is challenging and rewarding. It is also the reason providers exist. To improve health and wellbeing.

However, because purpose is so important to the job, to the consumer relationship, when the company acts counter to its purpose, disappointment can quickly become derision.

If at any point the consumer is impacted, employees – who are motivated more by the outcome of their work than a pay cheque – will have the evidence to confirm their worst suspicions. The loss of key staff at executive and line manager levels is almost definitely going to impact consumer outcomes. It’s why employee engagement and internal communication is critical. Health consumers tend to defend carers and physicians – whom they have an intimate relationship with – and target the company leadership who are largely abstract and simplistically defined as greedy, out of touch, only interested in costs not care.

When preparing corporate activity, health leadership needs to be engaged, watchful, and relentlessly focused on consumer value.

Before you push your barrow to market, plan well in advance what you will have in it and how it will be presented.

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