TCR — This sounds quite familiar to us. We’ve been through something very similar recently. And we have a few suggestions for our friends at both Anglo American and Xstrata…
But first. I read about South Korea’s plans to build a whole new city of the coast of Seoul. New Songdo City will be built on 1,500 acres of reclaimed land. And what will it be built with? All the stuff that Xstrata, Vale, BHP, Anglo and Rio Tinto dig out of the ground. Mining will never be a business that dries up and rolls away. If you want to invest in something that will endure, your better with these guys than you are with Google or Microsoft.
Mining merger tips:
1) Think about employees all the way through.
Some compare mergers and acquisitions to finding out that mommy and daddy aren’t going to live together any more. In fact the process of merger discussions is more like moving to a polygamist sect. Employees don’t know who to talk to, about what, when or why. And the result is that they can end up mistrusting you all.
2) Avoid vilifying anyone
This probably seems easy and obvious, but it’s not. When we set ourselves in opposition, the opponent seems to automatically grow horns. And that becomes a real problem when you have to work with them thereafter.
3) Show your change management skills quickly
Nothing is worse than a place that has no plan. Except maybe a place that has a plan, but doesn’t tell anyone about it. Managing change in M&A talks is a science… and an art. We’d suggest you bring in some professionals.
4) Don’t forget about your business as usual communications
A major school-boy error: To send out many messages saying it is ‘business as usual’ and then show no visible signs of doing any usual business.
5) Tell it like it is
In M&A work only a small number of people are ‘insiders’. And people assume that means that no one else can be told anything, and the insiders cannot talk. In fact the opposite is often true: there’s a lot you can say (and must), and the insiders tend to talk like drunken sailors. The grapevine goes into over-drive when people think there is not enough information. And very few businesses can control the grapevine. So that’s why you need to communicate more and say as much as you can.
There’s a lot to be said for good management and communications in an M&A situation. I know our friends will do it well.
/df
