Investor or Employee Message: What Each Audience Needs

An investor is asking what changes about the money. An employee is asking what changes about their own work. The investor message carries price, basis, funding and effect on borrowings, and is bounded by what the Securities and Exchange Board of India (SEBI) requires of a listed acquirer. The employee message carries what changes, when more will be known and who to ask. Neither can be produced by shortening the other.

What is an investor message, and what is an employee message?

Start on a street rather than in a boardroom. A sweet shop on a busy corner changes hands. Two people find out on the same morning. One of them lent the previous shopkeeper money against the takings and has a claim on what the shop earns. The other stands behind the counter six days a week and has a claim on nothing except a wage and a routine.

Both of them read the same sentence: the shop has been sold. And then their heads go to completely different places. The lender wants to know what was paid, where the money came from, and whether the shop can still service what it borrowed. The person behind the counter wants to know whether the shop opens on Monday, whether the shift pattern changes, and who they should ask.

Neither of them is being narrow. Each is asking the only question that their position lets them act on. And here is what the whole difference turns on: the answer to one of those questions is not sitting inside a longer answer to the other. The lender's answer cannot be trimmed and handed to the person behind the counter. There is nothing in it for them.

Investor communicationWhat a company tells the people who hold its shares, and the people who might buy them, about something that changes what the company is worth or what it owes. is what a company tells the people who hold its shares, and the people who might, about something that changes the money. Harivansh Packaging Limited is listed on both Indian exchanges. The message moves a price, and part of its job is levelling the field, so it goes to everybody at once, in public. Its content is money: what was bought, what was paid, on what footing that price was struck, where the cash came from, and what the borrowings look like afterwards.

Employee communicationWhat a company tells the people who work in it, and in a business it is buying, about something that changes how their working day is arranged. is what a company tells the people who work in it, and in the business it is buying, about something that changes their work. Sundarban Polymers Private Limited is unlisted, so the people inside it have no market announcement pointed at them at all, and they are the audience with the most at stake. The employee message is not about money. The employee message is about arrangement: what is different today, what is not, what has yet to be decided, and who a person can go to with a question that the message did not answer.

Both questions are legitimate, and neither is a smaller version of the other, so the answer is two messages rather than one message with two covering notes.

Why this feels harder than it is deserves naming. The people drafting these messages have been living inside the transaction for months. To them, the purchase is one thing, and the thing is complete: the reasoning, the arithmetic, the paper. The purchase genuinely feels like one story with one set of facts, leaving only the decision of how much of it to give each audience. The one-story feeling is the mistake, and the mistake is one of position rather than of care. From inside, it looks like a length problem. From outside, it is a different question entirely.

The communication plan that orders these two messages, and that fixes the rule that no audience learns about the transaction from somewhere other than the company, is covered separately. Setting the two messages against each other shows why the plan needs both of them as separate objects rather than one object with a covering note.

What must an investor message actually contain?

Five things, and the first four of them are arithmetic. The asset bought. The price paid, and the footing that number was struck on. The funding. The effect on the borrowings. And then, in one sentence and without a figure it cannot support, what the buyer expects the purchase to change.

Take them in order on this transaction. Harivansh Packaging Limited has agreed to acquire 100 per cent of Sundarban Polymers Private Limited. The first item is not trivial: 100 per cent is a different statement from a majority stake, and a reader who has to guess which one it was has been given nothing.

The price comes next, and it comes with its footing. The enterprise value is Rs 1,320 crore. The enterprise value is 10.0 times Sundarban Polymers' earnings before interest, tax, depreciation and amortisation (EBITDA) of Rs 132 crore for the stated period, and multiplying it out confirms the arithmetic: 10.0 times Rs 132 crore is exactly Rs 1,320 crore. The next step is where most readers of most announcements go wrong. Now run the bridge. Rs 1,320 crore is not the amount the sellers receive. Deduct the Rs 180 crore of net debt sitting inside the business being bought and the equity value payable to the sellers is Rs 1,140 crore, before the adjustments that the documents settle at completion. An announcement that stops at Rs 1,320 crore has told the reader a number and let them draw the wrong conclusion from it.

Then the funding. Rs 140 crore comes from Harivansh Packaging's own cash, taking its cash balance to nil, and Rs 1,000 crore comes from new borrowing at the company's own contracted rate of 9.0 per cent. The two amounts add to Rs 1,140 crore, the equity value, and running the bridge first is what makes that check possible. Its borrowings therefore move from Rs 740 crore to Rs 1,740 crore.

The right hand column of that table does more work than the middle one. Look at it for a moment. Every figure has a basisThe measure, the period and the entity that a number was struck against. A multiple without its basis cannot be checked, because there is no way to know what it was a multiple of. beside it, and the basis is what makes the figure usable. Ten times, on its own, is not information. Ten times what, for which period, of which business, is information. The same goes for a ratio: a numerator alone is a number, and a numerator with its denominator named is a measurement.

The investor message is where the base actually gets published, so every multiple in it names its measure and its period, and every ratio names its numerator and its denominator.

Nowhere does that bite harder than on leverageBorrowings measured against earnings, usually net debt divided by EBITDA, expressed as a number of turns. It only means something once the debt and the earnings in question have been identified.. Leverage on this transaction has exactly two honest readings and there is no third.

The consolidated reading takes all the debt that the combined business now carries. Harivansh Packaging's borrowings went to Rs 1,740 crore and its cash went to nil, so its own net debt is Rs 1,740 crore. A purchase of 100 per cent also brings the target's Rs 180 crore across, so the consolidated net debt is Rs 1,920 crore. The combined EBITDA is Rs 609 crore, being Rs 477 crore plus Rs 132 crore, and Rs 1,920 crore over Rs 609 crore gives 3.15 times.

The standalone reading takes only the acquirer. Rs 1,740 crore of its own net debt over its own EBITDA of Rs 477 crore gives 3.65 times. Both are correct. The two readings measure different things. A message may never put one entity's numerator over another entity's denominator. The result describes no business at all and understates the position.

For scale, before any of this happened the company sat at 1.26 times, being Rs 600 crore of net debt over Rs 477 crore of EBITDA. The 1.26 times is the number a reader compares against, so a message that gives the after figure without the before figure has made the reader go and find it.

The fifth item, what the buyer expects the purchase to change, is the only part of the message that is not arithmetic, and it has to be written most carefully. The reasoning for doing this transaction at all was settled in the sequence before this one and it is not rebuilt here. The message states the expectation plainly, in a sentence a reader can hold the company to later, and stops. The two businesses sell to some of the same customers, and that overlap is the whole reason the purchase exists. The overlap is a statement of fact. A promise about what the combination will earn is not a statement of fact. A figure put into an announcement becomes a figure the company is measured against for years, so an investor message declines to make one.

An investor will certainly ask about the effect on earnings per share, and the message can name that question without answering it. The per share arithmetic is worked in full under the per share effects of an acquisition, and it is a longer conversation than an announcement can hold. Naming it and pointing at where it is answered is honest. Ignoring it is not.

What must an employee message actually contain?

Four things, and not one of them is a number.

A tenant gets a letter saying the building has been sold. There is a version of that letter which says the new landlord is excited about the future of the property and has an ambitious vision for the neighbourhood. The tenant reads it twice, learns nothing, and goes to knock on a neighbour's door. There is another version which says: the rent is unchanged, the agreement is unchanged, the entry code is unchanged, the lift maintenance contract is being reviewed and word will follow by the end of the month, and the building manager on the ground floor is the person to ask. The second letter is shorter and it answers everything.

The four slots are exactly those: what changes now, what does not change now, when more will be known, and a person, by name, to ask.

On the day of an announcement the honest answer is normally that nothing changes today, and that makes the first slot the easiest and the most reassuring. Two businesses that have signed are still two separate businesses. The two businesses keep separate payrolls, separate premises and separate instructions until completion, and completion sits on the other side of a conditions period during which the transaction can still fail. Saying so is not a fudge. Nothing changes today is the single most useful fact the audience can be given.

The second slot exists because absence of information is read as bad news. If a message states what changes and says nothing about the rest, every unmentioned thing becomes a candidate for change in the reader's head by lunchtime. Listing what is not changing is not padding; it is closing doors that would otherwise stay open all week.

The third slot is the one that gets softened, and softening it is what breaks the message. The honest form of when more will be known is a date, not an answer. In due course is not a moment a person can wait for, so a message that says decisions will be communicated in due course has said nothing at all. A message that says the review starts after completion and that everybody hears the outcome within a stated number of weeks of that has given the reader something to hold. On this transaction, the elapsed spans are the transaction's own: twenty two weeks ran from term sheet to completion, of which the conditions period was nine. The twenty two weeks and the nine weeks are this transaction's own spans, and they are the sort of anchor the third slot needs.

The fourth slot is a named contactOne identified person, with a name, who will take questions the message did not answer. A shared mailbox or a job title is not a named contact, because nobody feels responsible for it.: one identified human being who will take the questions the message could not answer. Not a mailbox, not a job title, not a portal. A mailbox has nobody accountable behind it and everybody knows it. On this transaction, that person would be Ashwin Rege, who leads the transaction team, or Devyani Kulkarni, the chief financial officer of Harivansh Packaging Limited.

The third and fourth slots are what make it a message rather than an announcement, and the honest version of the third is a date rather than an answer.

Now the honest limitation. The record of this transaction carries no headcount, no site, no reporting line and no change to terms for either Harivansh Packaging Limited or Sundarban Polymers Private Limited. The shape of an employee message can therefore be taught, but not the content of one. A made-up figure about somebody's job is exactly what a reader carries away instead of the structure, so a made-up number of affected roles would teach the wrong thing.

Which of the two is regulated, and which is not?

One of them has a regulator standing behind it and the other does not, and almost every practical difference in how the two get produced follows from that single fact.

Harivansh Packaging Limited is listed on both Indian exchanges. SEBI sets what a listed acquirer must tell the market about a transaction, in what form and at what point, and publishes it at sebi.gov.in. The rules on unpublished information about a live transaction sit in the same place. The company law route, including what a board must do and how the filings run, sits with the Ministry of Corporate Affairs at mca.gov.in. Where a disclosureA statement a listed company is required to make to the market so that everybody receives the same information at the same moment, rather than some people receiving it earlier. appears once it has been made, the National Stock Exchange (NSE) at nseindia.com and the Bombay Stock Exchange (BSE) at bseindia.com are the places to look. A summary written from memory is worth less than nothing on a live transaction, so the current text at each source governs.

Sundarban Polymers Private Limited is unlisted. Nobody trades its shares, so no market disclosure attaches to it at all. And the employee message, on either side of the transaction, has no equivalent regulator here. The employee message is governed by employment obligation, by whatever consultation the contracts and the arrangements require, and by ordinary decency. Employment obligation and decency are a real set of constraints, but neither is a regulator with a published rulebook and a filing address.

Here is what that asymmetry does inside a company, and it is completely predictable. The regulated message gets a named person accountable for it. The regulated message gets drafted weeks early. The draft gets reviewed by the transaction team, by the finance function, by the board, and by the advisers on both sides. Every figure in it is tied back to the model. Every sentence is read for what it commits the company to. By the time it goes out it may have been through fifteen versions.

The unregulated message gets whatever is left. There is no filing deadline forcing it forward, no reviewer whose job depends on it, and no external body that will ever ask to see it. The announcement is the document sitting on the desk, so the unregulated message moves to the end of the queue and gets written the evening before, by whoever is free, out of the announcement itself.

Somebody is accountable for the message with a regulator attached, so it gets reviewed. Nobody is accountable for the message with no regulator attached, so it gets written last by whoever is free, and the audience with the most at stake receives the least considered document.

Notice that this is not a criticism of anybody's diligence. The pattern is simply what happens when one workstream has an external forcing function and the other does not. The fix is not to try harder. The fix is to give the second message its own accountable person and its own deadline, and so a forcing function of its own.

How does the timing differ, and what forces it?

The investor message has a window rather than a date. At the early end it is bounded by what may not be said: information about a live transaction that has not been published is not the company's to hand out selectively, and what may be done with it is SEBI's territory at sebi.gov.in. At the late end it is bounded by what must be said, and by when. Between those two edges there is a window, and the company chooses a moment inside it.

Before the window opens, the company may still need a form of words for questions it cannot answer. A holding statementA short prepared form of words used when a company is asked about something it is not yet in a position to discuss, keeping the answer consistent wherever the question is asked. does that job: a prepared, consistent answer to a question the company is not yet able to address, giving the same response whoever is asked and wherever.

The employee message has a deadline rather than a window, and the deadline is set by the ordering rule the communication plan fixes: the workforce must not learn about the transaction from somewhere other than the company. Once the market has been told, that rule has roughly thirty seconds of life left in it. Somebody's phone buzzes with a news alert on a shop floor and the message has already lost.

So the two constraints pull against each other. The investor constraint says not before a certain moment. The employee constraint says not after that same moment. Set them on one line and there is exactly one point that satisfies both.

The answer is simultaneityReleasing two messages at the same moment, keeping either audience from learning the news through the other audience's channel., and it is genuinely the answer rather than a compromise. Neither constraint has any give in it. Shading the investor side, by holding the market announcement until the workforce has been walked through it, breaches the constraint that exists precisely to stop some people knowing before others. Shading the employee side, by telling the workforce a day early and quietly, creates a large population of people holding unpublished information about a live transaction. Unpublished information is territory the company does not get to improvise in.

The two constraints collide unavoidably, and the resolution is simultaneity rather than a compromise on either one.

Simultaneity is an operational commitment, not a sentence in a plan. Simultaneity means the employee message is written, reviewed and approved days before it is needed, sitting ready. A message that goes out at the same minute in theory and eleven minutes late in practice has failed the constraint, so the sending mechanism gets tested. Managers who will be asked questions have a briefing line ready at the same moment, not an hour later. Who holds unpublished information and what they may do with it is a question for SEBI at sebi.gov.in rather than for convenience, so the plan decides deliberately who is brought inside the transaction before the announcement, and on what terms.

What can each audience actually do with what it hears?

The test of a message is what its reader can do next. Necessary content is content the reader can act on, and the rest is decoration.

An investor can do three things. The investor can sell, can buy more, or can vote. Every one of those is an action taken against a price, and all three depend on the reader being able to check the company's arithmetic against their own. The need to check is why the investor message has to be complete enough to act on and why it has to reach everybody at the same moment. A figure without its basis is not merely untidy in this context; it removes the reader's ability to do the one thing the message exists to enable.

An employee can also do three things, and they are less often listed. The employee can leave. The employee can stay and quietly stop investing effort, and that is slower and more expensive. Or the employee can tell somebody something.

The third action is where most communication plans have a hole in them. Think about who a person in either of these businesses talks to in a normal week. A person talks to the customers they serve. The two businesses sell to some of the same customers, and that shared customer base is the reason this purchase exists at all, so those customers are now hearing about the transaction from two sources with different information. A person talks to the counterparties they deal with too, and this transaction has two conditions requiring consentPermission from someone outside the transaction whose contract is affected by it, without which the transaction cannot complete on the terms agreed. from counterparties whose contracts change hands. The two counterparties are being asked to agree to something while also hearing about it informally. Talking about news is what people do, so a person tells their household, their neighbours and everybody else.

The employee audience contains people who speak to shared customers and to the two counterparties whose consents this transaction still needs, so an internal message is also, in effect, an external one.

The reach of the internal message has a drafting consequence rather than a security one. Asking people not to repeat things does not solve it; that has never worked anywhere. The fix is to write the internal message so it survives being repeated. Every sentence in it should be a sentence the company would be content to see quoted back to it by a customer, by a counterparty whose consent is outstanding, or by a journalist. Not because employees are untrustworthy, but because a message travelling through four conversations arrives as its most quotable sentence and nothing else.

What does each message get wrong most often?

Each has a characteristic failure, and they look nothing alike until what lies underneath them is named.

The investor message fails by quoting a figure without its base. The message says the purchase is at ten times and does not say ten times what, over which period, of which business. The announcement says leverage will be around three times and does not say whose debt over whose earnings. The same message says the enterprise value is Rs 1,320 crore and leaves a reader to assume the sellers received it, when the equity value after taking off Rs 180 crore of net debt is Rs 1,140 crore. Each of the three reads as informative and cannot be checked. The reader does not know they have been given nothing, and that is a worse outcome than saying nothing at all.

The employee message fails differently. The employee message answers a question nobody asked. The draft opens with strategic rationale, moves to complementary capabilities, mentions an exciting new chapter, and never touches whether the site stays open, when anybody will know, or who to ask. The prose is not bad. The prose is often beautiful. The message is simply pointed at a different reader than the one holding it.

Put those two side by side and the shared error becomes visible. In both cases the writer wrote the thing they had in their head. The person drafting the announcement had a model open and wrote from the model, so out came multiples and ratios stripped of the bases that made them mean something to somebody who is not looking at the model. Everybody in the room had been discussing the transaction rationale for four months, so the person drafting the internal note had the rationale in their head, and out came the rationale.

Both failures are the same failure: writing what the drafter wanted to say instead of answering what was asked.

What do both messages look like on this transaction?

Enough description. Here are the two messages for the Harivansh Packaging Limited purchase, written out, one after the other. Read as a pair, they make the argument themselves.

Now count what is in it. Almost every sentence carries a figure, and almost every figure carries the basis it was struck on. Strip the bases out and the message halves in length and loses all of its usefulness. The bases are the content rather than the ornament.

Notice also where the message stops. The announcement does not say whether the price was a good one. Nor does it promise what the combination will earn. The announcement states what was agreed, on what footing, with what money, and what it did to the borrowings, and then it stops. An announcement that goes further has created a figure the company will be measured against for as long as anybody remembers it.

Now put the two drafts next to each other and read them as objects rather than as prose. The first is almost entirely figures with their bases attached. The second contains no figure at all except a span of weeks. The two drafts share a transaction, a date and a set of facts, and have almost no sentences in common.

The whole argument sits in one observation: nothing deleted from the first draft would ever leave the second behind, so the second cannot be produced by shortening the first.

How does a transaction team actually use this split?

Five habits, and every one of them is cheap compared with what it prevents.

The first is two drafters from the start. One person who knows what an investor needs and one who knows the workforce, drafting separately from the same set of facts rather than one person adapting a document. The two drafters should share the facts and not the sentences. The moment somebody says the internal note can be based on the announcement, the failure described here has already been set in motion.

The second is to finish the employee message first. The employee message is the one with no external deadline, so it will otherwise be the one that is late. Put its deadline earlier than the announcement's, give it a named person accountable for it, and let it sit finished while the regulated message goes through its final reviews. Inverting the order that way fixes most of what goes wrong here.

The third is the read-back test, and it takes ten minutes. The draft employee message goes to somebody who is in that audience and who has not been near the transaction. The reader is asked to say, without looking back at it, what changes for them, when they will know more, and who they would ask. If they cannot answer all three, the message is not finished, whatever its prose is like. The investor draft gets the same test from somebody who has no access to the model: what the multiple was struck on, and what the leverage figure measures.

The fourth is a question log written before the message goes out. Sit down and list the twenty questions the message will produce. Most of them will have the answer that it is not yet decided, and that is a perfectly good answer as long as it comes with a date. An unanswered question must not arrive as silence. Silence gets filled by whoever is most confident in the room.

The fifth is briefing the people who will be asked. Managers get the questions within minutes, and a manager who received the same document as everybody else is a manager who cannot help. Managers need the message, the question log, and the honest list of what is not known, in their hands at the moment it goes out rather than an hour later. Who is brought inside the transaction before that moment, and what they may do with what they know, is a matter for the plan and for SEBI at sebi.gov.in, not a convenience decision.

And read from the other end, each professional audience checks a different line. Somebody analysing the acquirer goes to the basis: ten times what, and which leverage reading is being quoted. A lender goes to the borrowings line and to the conditions. Somebody in the business being bought goes to the fourth slot to see whether there is a name in it. Three readers, one transaction, three completely different first sentences: the work is two documents rather than one.