The Value of a Good Memo

Yesterday, Valeant Pharmaceuticals (NYSE:VRX) filed an 8-K that included a copy of an internal e-mail from Mike Pearson, CEO, to all employees of both Valeant and its merger partner, Biovail (NYSE:BVF).  I thought the five-page memo was thoughtful and chock full of information that should help employees keep abreast of where things stand with the merger.  It was honest and forthright, and I found it refreshing.
 
Too often senior management shies away from having direct communication with his or her employees, and it confounds me when this happens during a company’s most important transformational event.  I doubt whether this missive will eliminate the chatter at the water cooler (do these still exist?), but at least if there are rants they will be more informed.
 
The filing of the 8-K also informed investors (as it was meant to), and revealed a few more details about some of the expected merger synergies.  This then prompted analysts to issue reports highlighting these updates (all of which seemed to be lauded).  All told, an elegant way to disseminate “news” to employees and the Street, versus impersonal highlights spelled out in a public news release.  But even if you don’t go all out like Valeant did and file an 8-K, do continue to regularly communicate with your employees – just don’t include any new material bits.

— PondelWilkinson, investor@pondel.com