When M&As Get Scrapped

Despite announcements and good intentions, mergers and acquisitions (M&As) sometimes don't work out.

M&As aren't unlike personal relationships, and one that gets called off might be equated to, say, a broken engagement. The parties involved thought there was a fit, but just before the final commitment one or both backs out.

There may be squabbles over money, property or other assets. There may be power struggles. Or there may be another suitor that catches the eye of one of the intended.

Stuff happens. Deals are made and then deals fall apart. And it happens in good times and in bad.

But what differs lately is that deals have been called off not because of the parties involved. The economy is breaking up potential partners.

Consider Samsung and SanDisk as an example. Bloomberg.com reports that Samsung, the world's second-largest maker of semiconductors, has withdrawn its $5.85 billion offer to buy memory card maker SanDisk, indicating the economy may cause losses at SanDisk to worsen.

This isn't the only deal to grind to a halt because of the economy. Waste Management, a leading provider of residential and commercial disposal services, has withdrawn its bid to acquire rival Republic Services, according to RTT News. In making the announcement, Waste Management cited the current state of the financial markets.

What do these called-off M&As signify?

It's a little early to know if these and a few other similar situations suggest a trend. But clearly it bears watching when companies no longer feel confident enough to go through with deals you have to assume they carefully considered at the outset.

These broken engagements have implications for employees as well. Imagine the confusion and concern of the workforce caught in the middle of one of these on/off relationships.

Under these kinds of circumstances, communication is essential. Retention, productivity, and future recruitment efforts depend on it.

In today's transparent online world, addressing employee confusion and concern about an M&A that's been scrapped has to do with preserving the company's image. Even so, this shouldn't be the main reason for communicating with employees.

Yep, it's about doing the right thing.

And sure, a case can always be made for best practices in employee communication. But especially now, during these tough economic times, an organization's value also depends on showing respect for its workforce.