If you want to study corporate stakeholder communication over the course of M&A deals as well as other change processes like restructurings you can now watch Lufthansa taking over major Air Berlin assets. But you can just as well read an academic paper published at the University Hohenheim titled „Mergers & Acquisitions Mirrored by the Media”, if you can spare the time. The paper analyzes ten cross-border transactions with German stakes involved. It screens 2,400 stakeholder quotes in 500 news reports published by two leading international news agencies. The major finding of the research in one sentence is this: The media “share of voice” splits up between a rising number of stakeholders, making it more difficult for corporate players to control the communication during the transaction.
On average, four different stakeholders are quoted per article. During the course of the whole transaction no less than 17 different stakeholders raise their hands. Each one of them has unique views and interests. And sometimes they clash head-on like in a frontal collision. Stakeholders who feel left out in the cold tend to turn to the media more often and air their displeasure. The associated parties range from employees to shareholders, suppliers and journalists and include unions, capital markets, politics and public authorities.
If the buyer in a corporate takeover is a leading member in the DAX index, like Lufthansa, it is bound by strict insider rules. It needs to handle a delicate balancing act. On the one hand it needs to inform its employees early on and in a satisfying way about the important details of the pending transaction. Many employees fear for their jobs or are afraid of seeing their careers ruined. But on the other hand a lot of the details around the takeover will have influence on the share price and need to be discussed and negotiated with the lawyers in a painstaking way before they can be released. This leads to the flow of information drying up during a takeover negotiation. Thus, the capital market rules severely limit management´s ability to promote appreciation among stakeholders and prevent guesswork and speculation. In Lufthansa´s case, only two days before the news broke on the Air Berlin takeover, the company managed to wrap up contentious negotiations over a pay dispute with its pilot union called Cockpit. If you don´t want to show any weakness during strenuous proceedings like these you cannot put all your cards on the table.
There are five key steps you need to comply with in your stakeholder communication:
#1 Aligning of expectations: Management needs to understand the expectations of involved stakeholders and match them with the company´s own. Communication should be based on this alignment.
#2 Focus of communication: Communication should prioritize those stakeholders that will have the largest impact on the company´s strategy.
#3 Themes and aspects: Corporate communication during the M&A process also needs to be thoughtful with regard to the topics that are being addressed. Communicators need a good overview of aspects stakeholders are focusing on, but also a good understanding of the corporate concerns and priorities that stakeholders prove to be responsive to.
#4 Offering talks: There needs to be a place or panel for the various stakeholders to meet, discuss and align their points of interests and expectations with those of the organization in order to match them.
#5 Comprehensible approach: Once the transaction strategy is aligned with the company´s overall strategy it should be communicated as comprehensible as possible.
Media reports following the announcement of the takeover of major Air Berlin assets by Lufthansa show that the airline´s management was aware of these five steps and basically lived up to them. Lufthansa CEO Carsten Spohr was prominently quoted in all major publications right after the announcement. Without any delay he took the chance to comment on the Air Berlin deal and present the points of view of the executive board. Half a day before the signing ceremony „Rheinische Post“ published an exclusive interview with Spohr. It allowed the CEO and the company to secure lots of editorial space in major nationwide and regional media. This assured that Lufthansa gained control over the media agenda following the breaking news of the deal.
With his media statements Spohr addressed the most important stakeholders. In some – but not all – aspects he was forthcoming. He offered those Air Berlin passengers that were stranded abroad to provide a return flight at a fair price. And he squarely admitted that he didn´t know exactly how many passengers were eligible for his offer. Spohr´s forecast that the transition period would not pass without hiccups was honest and authentic. By raising the bar only moderately he was able to deflate expectations to a realistic level. With his forecast for a six to nine-month transition period for the execution of the takeover Spohr visibly tried to foster understanding and be precise with respect to the stakeholders.
It remains to be seen, though, whether – as Spohr predicted – ticket prices won´t go up in the aftermath of the takeover. Some journalists openly expressed doubts as to whether this was a credible prediction. A report in nationwide daily Die Welt stressed that Lufthansa would soon be able on major routes, among them Cologne-Munich, to fix prices like a monopolist and that in the future customers would only have “a choice about as limited as that of consumers in the former GDR.” At least the Lufthansa CEO has signaled that he is keeping an eye on ticket prices – and thus on customers affairs. He will certainly be benchmarked against his own prognosis in the not too distant future.