In the shifting world of GovCon M&A and other big events, one fact becomes clear: the messages matter
The phrase “never a dull moment” could have been coined for today’s top communications executives at government contracting companies. A constantly changing environment generates more complex messages, expands the types of target audiences these must reach, and heightens the imperative to get it right.
Although many of the needs are similar, the types of transactions and big events experienced by these companies differ broadly. Mergers and acquisitions, spin offs, “go-privates,” and changes in top management can all require specialized strategic communication skills.
At government contracting companies, such transactions aren’t isolated events. They’re facts of life. Even with the pace of M&A dipping slightly in 2011, there was plenty happening to keep communications executives exercising their agility.
For SRA, the transaction event was the company’s acquisition by Providence Equity Partners, which was considered one of the biggest GovCon deals of the year. Meanwhile, DynCorp International entered 2011 as both an acquired company—by affiliates of Cerberus Capital Management—and an acquirer, purchasing international development and strategic communications firm Casals & Associates.
Continuing a quick look at some representative action: In another private equity deal, the company previously known as Global Defense Technology exited the public market, rebranded itself as Sotera Defense Solutions, and went on to buy two other companies. Publicly traded Exelis was spun off as part of a complex three-way split executed by ITT, one of the world’s largest conglomerates. Health informatics power house Vangent was scooped up in September to be part of General Dynamics Information Technology. CACI International, as part of its rapid run of canny cybersecurity and C4ISR acquisitions, took on Pangia and Paradigm Holdings. And these transactions ran both ways: As part of its divestiture plan, Lockheed Martin sold Pacific Architects and Engineers (PAE) to better align with its business strategy.
As those following the federal contracting news are well aware, a number of factors are spurring these corporate evolutions. Markets such as cloud computing, cybersecurity, and big data have put significant opportunity into play—with top GovCon players swiftly jockeying for talent, customers, and competitive advantage. Meanwhile, cuts in defense spending, plus the usual budget uncertainty of an election year, are prompting intense scrutiny of financial and operational structures.
Transactions Up the Communications Ante
If you feel like you need a scorecard to keep up, you’re not alone. Policymakers, industry analysts, Wall Street, employees, and federal customers, too, are working hard to follow the action and ascertain the winners and losers.
All this activity underscores the importance of one aspect of operations: communications.
“Audiences have to understand the rationale of what you’re doing and what you are going to accomplish,” said Lawrence Rand, co-founder, president, and CEO of Kekst and Company, a global strategic, corporate, and financial communications firm that provides counsel to guide clients through pressing communications concerns. “Your best-laid plans can go awry if not communicated correctly.”
Corporate reputation, workforce retention, company valuations, and millions of dollars in revenues rely on getting the message out powerfully, correctly, and in a timely fashion. The commercial world doesn’t lack for prominent examples of high-level, high-profile communications gone wrong—think Enron’s handling of earnings statements in 2001 or BP’s struggles after the 2011 oil spill.
Particularly for the GovCon company, a muddled or miscommunicated message can mean not only embarrassment and a potential Harvard Business Review case study on what not to do, but also a lost multi-million dollar contract or partnering opportunity, a plunge in share price or market valuation, or a defection of top talent.
And most serious of all: Government contracting depends on exemplary integrity in dealing with the nation’s dollars under unsurpassed levels of oversight, compliance, and potential penalties. Regulations and reputations are riding on getting it right—and communications executives know it.
“If a communications strategy is poorly planned or executed, the ramifications are significant,” said James Reagan, currently SVP and Chief Financial Officer of PAE and formerly CFO of Vangent. He paints a scenario of possible consequences:
“Customers may feel unimportant and alienated, leaving the company vulnerable in today’s fiercely competitive environment,” he said. “Shareholders see the share price languish as analysts misunderstand the strategic rationale of a deal and the financial implications for the future. Subcontractors and employees fear displacement and a need to reestablish their role as key members of the program team.”
“You only have one time to make a first impression,” said David Albritton, vice president and chief communications officer, Exelis. “If you miss that opportunity, it’s going to take a long time, or it’s going to be a tough row to hoe for you to change their minds.”
Because of the impact communications can have on a transaction, some companies get communications executives to the table as early as possible in a transaction process, whenever possible. “I will say it honestly, they’re a critical component to the deal,” Rand said.
External Clarity
“For several years now, companies in the federal market have been operating in an era of heightened reassessment due to new fiscal realities and changing government priorities,” said Ashley Burke, vice president of communications at DynCorp International. “This environment has made it especially important to understand the insights that are driving an acquisition.”
“With uncertainty, with people reading the headlines about possible sequestration within the U.S. government and what that might mean to the defense budget, there are a lot of questions,” Albritton said. “We had to articulate what types of contracts we were winning, what types of contracts we were pursuing, how well we’re performing on contracts, and those types of things.” His team’s work included communicating regularly with analysts and investors and helping U.S. and international customers understand the reasons behind the spinoff’s formation and corresponding logistical changes.
Keeping Employees Informed
For SRA, consistency was key to success after its recent acquisition by Providence Equity Partners. This included reassuring employees that “the SRA culture and values would endure,” said Sheila Blackwell, vice president of communications and public affairs at SRA.
Culture is everything at SRA—and has been since the company’s founding in 1978. “People have returned to SRA after leaving for other firms, because of the caring culture here,” Blackwell said. “Whenever we talked about the value of the transaction to our employees, we had to make sure our commitment to this culture came through loud and clear.”
Employee communications was a key priority for Albritton at Exelis, too. ”It was critical for us to get 21,000 employees fully aligned with the new direction of the company,” he said. “We had to make sure that employees would get the same answers to their questions, whether they asked the CEO or their local manager. That takes alignment, leadership buy-in, and a good functional discipline to make sure you’re using all the right channels to reach the right levels.”
Andrew Bryden, vice president of marketing and communications at Sotera, also emphasized the importance of engaging employees. “They are the ambassadors of your brand, and it is essential that you keep them informed and engaged.”
To arm these ambassadors with consistent messages to share with customers and the world, corporate communicators have an array of traditional and non-traditional channels at their disposal, including intranets, the Internet, social media, and beyond.
The New News Cycle
Some challenges transcend transaction types and audiences—an exponentially shrinking news cycle being one of the greatest.
“You don’t have a 24-hour news cycle anymore,” Rand said. “You’re lucky if you have a 24-second news cycle.” This leads to a critical lack of context: “People out there get data, but they don’t always get knowledge.
“Before we respond to someone who says ‘I need it first,’ my answer is, ‘We need it right.’” Rand advocates for a more measured approach that prioritizes accuracy.
“Add to that the emergence of social media and the potential for people to opine on your brand in cyberspace,” Bryden said. “You can see that today’s communicator has to be agile, aware, and alert when communicating about transactions.”
Another issue is when to bring in different audiences and employees. Informing the customer—often, a government agency—has to be done with the right timing and transparency; getting the word out within a company can be restricted by regulations as to how much is communicated when. It’s a delicate balance that for GovCon companies has important regulatory and trust implications.
Getting the Good Word
But the challenges of transactions can also hold opportunities. For Sotera, the significant transformation from a publicly held to a privately owned company introduced the opening to rebrand, complete with a name change.
Six months before the transaction, while still operating as Global Defense Technology & Systems Inc., the company expanded its capabilities by acquiring two cybersecurity firms. This, along with a new injection of capital, spurred a new identity.
Management received positive feedback on the Sotera name and invested significantly in a communications program that articulated what the company was doing and why. Getting everyone informed and aligned in this way was a major plus.
“The keys to our success were in the detailed planning, early engagement, and testing with customers and employees and simply having a name and brand identity that works,” Bryden said.
Reaping the Rewards
An effective communications strategy doesn’t end when the transaction has settled, executives made clear.
“One best practice that seems obvious but is often overlooked is that transaction communications does not involve a one-time push of information,” Burke said. “It involves a commitment to a regular program that clearly explains the rationale and implications of the event. Thinking ahead and planning beyond the announcement are important. These communications lay out a roadmap for employees, customers, investors, and others to understand the way forward.
“By their very nature, transactions create tensions between those who want change and those who want stability,” Burke continued. “With communications grounded in the rationale and implications, a company can operate with consistent messages that help create a foundation of trust.”
Communicators’ continued alignment with the goals of the new entity keeps the messages strong—and positions the company for changes sure to come in the future.
“By understanding business strategy, communicators can help their companies embrace the opportunities of a transaction without inadvertently creating new challenges,” Burke said.
Who’s in the Audience?
In the course of a transaction, consistent messages need to be communicated in different ways to different audiences. In the GovCon world, these audiences are wide-ranging and diverse. In looking at a few of the audiences communication executives might need to manage, the complexity of the role becomes clear:
• On-site employees
• Off-site employees, U.S. and international
• New employees from acquired/merged company
• Prospective employees
• Federal customers
• Government agencies
• Strategic partners
• Sub-contractors
• Potential partners
• Suppliers
• Media—broadcast, print, online, trade, financial
• Local communities with large facilities & employee bases
• Industry analysts and Wall Street
• Bloggers and niche publications for business, finance, and technology
• Social media channels
GCE
