How can a CEO initiate a merger conversation and ensure a successful outcome?

When considering mergers or acquisitions, CEOs typically have only two options to start a conversation with a potential suitor to keep the future of the company on a successful path. It’s going to be CEO to CEO or possibly an initial conversation between business development staff. Which is better? Well, that depends.

All merger talks are strategic in nature. The higher the range and the higher level, the better. A CEO-to-CEO conversation is a natural place to start. CEOs should be talking anyway. Conversations among CEOs are often very mixed. Ideas of joint development, partnerships and even mergers are normal topics. A CEO-to-CEO conversation will save time for the company as a whole. Especially, if it’s not a fit.

No CEO needs runaway rumors that disrupt internal and public perception.

Business development is always looking for profitable opportunities, but they generally won’t initiate merger discussions without some direction from the executive suite. Use this option if the CEO wants less involvement or visibility in the project. Once authorized BusDev can submit a more developed plan for your consideration. The CEO should give BusDev a general idea of ​​what offers are interesting and let them do the legwork. Use the general appearance that the company is always looking for opportunities.

So how does the conversation progress?

First, it is very important that the initial conversations are calm. No CEO needs out-of-control rumors disrupting internal and public perception when he’s just exploring one of hundreds of strategies. So get together from CEO to CEO over coffee in a secluded spot and explore the future.

These initial one or two talks should cover some critical management and strategic issues.

• How would a merger work? What would the end result look like?
• What strengths are attractive to each party for a successful merger?
• General sense of difficulties and challenges?
• General parameters of the deal.

Expand the inner circle

When it looks like a deal is achievable, CEOs need to move fairly quickly in two directions. First, get at least one board member in the inner circle. Executive directors must take strategic leadership for the development of the company; however, in this business environment, miserable is the CEO who overextends himself without board involvement. The lead director can be extremely valuable at this point. Keep the board informed of progress. Understand the limits and objectives that the board is likely to impose.

The other necessary expansion now brings in a small task force from each side to drive the details and the process. Make the team just one, two or three trusted people. The process still needs a protective shield. Therefore, small teams are less visible and can better contain information.

Proactively let the world know

Look, it’s going to leak anyway. Better to get ahead of the rumor curve. Within two to four weeks, let him know that the company is EXPLORING potential mutual opportunities. Hopefully, both companies agree to launch. If not, just don’t give names, but monitor information postings. There are no details, because who really knows how, when and if “mutual opportunities” really happen.

The press, shareholders and especially employees will immediately start with questions, false facts and doubts. Even if you only start with internal communications, get started. Public companies may have additional requirements and restrictions around external communications.

Staff need reassurance early and often. It’s best to be honest…

• I’m really just exploring to see if there’s a benefit or if you’ll drop it.
• There are no changes to staff, projects or any activities at this time. It’s really in the “what if” phase.
• He promises to let everyone know soon when there’s more to know.
• Do everything possible to consider all the ramifications and impacts of any possible future cooperation.

Keep the conversation going while there is an opportunity. Often when two parties begin to talk, one becomes energized and starts looking for other opportunities. Better to maintain the effort so as not to lose a good fit. But drop it quickly if it doesn’t suit you.