Coaching Your Employees to Talk to Buyers

As the CEO of a company entering the M&A market, it is crucial that you are prepared. Simply being able to talk effectively to buyers is a big part of that preparation. And if key employees, such as the CFO, CTO, or high-level product managers, also take part in the M&A process, it is just as important they be prepared to talk to buyers.  Your responsibility as a CEO is to ensure that they are prepared. 

Not being able to talk to buyers in an effective way can kill deals. Consider the following hypothetical example. A CEO is making a presentation of his company to a potential buyer. During the presentation, the buyer asks some pointed questions. Rather than giving succinct, specific answers, the CEO meanders into long-winded responses that leave the buyer wondering if the CEO is a good fit.  

Or consider the following scenario. The CEO invites some key employees into a meeting with a potential buyer. During the meeting, the buyer directs some questions to the employees regarding seeming gaps in the company’s technology. Rather than giving straightforward answers, the employees react in an evasive or defensive way.  Worse still, the CEO critiques the employees during the meeting. The buyer leaves the meeting sensing that the relationship between the CEO and the employees may not be ideal, and wonders, "Is this really a company culture that we want to invest in?"

Coaching for representation
Your employees are a representation of you and your company to buyers. So what employees say to buyers and how they say it matters a great deal. Many of the same principles that guide CEOs in presenting their company to buyers also apply to employees when they talk to buyers. These include:

• Be professional. Treat buyers with respect.  Be attentive to buyer questions. Actively listen to what buyers have to say.  Don’t interrupt while a buyer is asking a question. 
• Be succinct. Answer questions directly, clearly, and to the point. Don't be evasive or overly wordy. Be respectful of the buyer's time. If you are asked a yes or no question, answer yes or no. If the buyer wants additional information, they will ask for it. 
• Be honest. If asked about a negative issue or problem, be honest about it. Honesty, even when related to negative issues or problems affecting the company, adds to your (and the company's) credibility.
• Be consistent. Ensure that what you say about the company mirrors what other employees (including the CEO) say. Buyers will quickly identify inconsistencies, which can diminish credibility.
• Be knowledgeable. Be prepared to answer specific buyer questions, especially questions that deal with an area in your domain. For instance, if you are the company CTO, be prepared to answer questions about the company's technology (albeit in a concise and clear way). However, do not be afraid to say "I don't know" if you truly do not know. Again, authenticity is important. But follow it up with "I'll get back to you with an answer."  
• Be culturally attuned. In cross-border M&A deals, major cultural differences need to be understood. For instance, in some countries hierarchy is very important. In those societies it is required to respect status in business relationships. For instance, if you meet with a buyer's team from Japan, who you speak to on that team is important. Japanese people are most comfortable interacting with someone they consider their equal. Also, gestures can be problematic. For example, a thumb's up gesture, which is viewed positively in American culture, can be viewed very negatively in other cultures. So avoid gestures.

Coaching for due diligence
Due diligence is a crucial phase in the M&A process. So preparing your key employees for due diligence is vitally important. Here are some things that you can do to prepare your employees:

• Bring employees up to speed. Unless they already know, tell the employees who you designate to be part of the due diligence process about the who, what, and why of the deal. What company are you dealing with in the M&A? Why are you entering into an M&A? What are the specifics of the deal that you want to share with employees? Also, present a schedule of the overall deal and a timeline for the due diligence effort. 
• Put together a due diligence checklist. A due diligence checklist is a document that lists all the things the buyer will examine about your company before agreeing to a sale or merger. The checklist is typically comprehensive and covers everything from your products and services, to information about your customers, your employees and benefits, contracts, tax records, licenses, assets, and legal issues.  Make sure your designated employees understand the checklist and any requirements related to it.
• Protect confidentiality. Make sure that you restrict information about the M&A to only those employees who need to know. Also, ensure that employees involved in the due diligence process know what the plan is for protecting the confidentiality of highly sensitive information. Keep in mind that divulging highly sensitive information to the buyer could be damaging to your company if the deal doesn't go through. Some companies will put an incremental non-disclosure agreement (NDA) in place relative to the M&A process.
• Prepare the data room. A data room is a secure physical or virtual location in which you as the seller store essential documents required during the M&A process. Identify which employees are responsible for gathering which items of critical documentation to be including it in the data room. Then give appropriately managed access to the room to the people on the buyer’s staff or to the buyer’s representatives who are important to the transaction.  

Coaching for cohesion
How you relate to your employees in meetings with buyers and how employees relate to you in those meetings can have a big impact on M&A deals. If there is an apparent lack of alignment between a CEO of the seller’s company and the employees, it can be a deal killer. It is crucial that the members of the seller’s team be cohesive and supportive of each other in dealing with buyers. Buyers will enter into an M&A agreement if these see opportunities for growth. But they also need to be comfortable that the deal will mean a good cultural fit. How the selling company’s CEO and employees appear to view and interact with each other is a key element of the company culture as seen by the buyer. As a CEO, you need to ensure that the view is a very positive one.

Why coaching in important
Remember, the seller’s goal in an M&A is getting an optimal outcome, whether it is an attractive liquidity event or an excellent partnership for growth. The employees you involve in the M&A process are important allies in helping you get that result. So good, effective coaching is a necessity.