10 ways your brand can ensure a successful M&A

Mergers and Acquisitions (M&A), are notably one of the most common ways for a business to advance. They provide opportunities to increase market share, gain new services or talents, and they can provide a way to access new sectors or demographics. The benefits are unique to each business, and the strategy has become a standard practice, but why do so many of them fail?

Many mergers falter at the negotiation stage, if not, they often fail to deliver on expectations once the deal is signed. A negotiation demands a significant investment on both parties, research, costings, due diligence, not to mention the time and distraction it places on senior management guiding the process. It’s an investment that few can afford to get wrong.

Many of the mistakes stem from a lack of clear vision, about the path the business should take, the involvement to get there, and the real benefits to be gained. Misapprehension from within can unsettle and derail the proceedings. Valued customers can become nervous and withdraw their support, or the media can hound the process creating misgivings for all involved.

Many businesses, quite rightly, address the logical aspects of the M&A including assessment, valuation and due diligence. They often neglect the need for communication and the role the company’s brand can play in the process. They make the mistake of managing the process through well-worded press releases, which usually arrive too late, and only deal in the financial ramifications.

We’re undoubtedly living in a time when more transparency is expected of our leaders. Good employees want to be a part of something, they are willing to dedicate themselves to a business that is going somewhere, and is inclusive enough to bring them along for the journey. Customers have more options than ever, when they find a business that meets their expectations, they want to consolidate the relationship, instead of laboriously shopping around.

With a well-executed strategy for the merger period and the time after, a management team can formulate a strong vision for their future company. The strategy can steer them away from many of the unforeseen obstacles that often arise in connection with most mergers and acquisitions. A well-developed strategy should inspire and communicate with all stakeholders, help to provide support for the efforts that must be made, instead of creating even more friction. Once an agreement is delivered, expectations will be very high, and an effective branding strategy takes this into account and incorporates what initiatives should be taken to demonstrate how to move forward and illustrate what value the agreement will have for everyone involved.

With a well-executed brand strategy for the merger period and beyond, a management team can formulate a strong vision for their future selves. The strategy can steer them through the many unforeseeable obstacles, that emerge through most M&A’s. A well-conceived strategy should inspire and communicate to all stakeholders, earning support for the endeavour, instead of adding further friction. Once the deal is delivered, expectations will be high, an effective brand strategy anticipates this, it incorporates initiatives to demonstrate momentum and illustrate the value for all involved.

In this article, we present some of the pitfalls to watch out for from a branding perspective. We offer insight into how to manage your brand, post-merger. And provide some practical ways, to utilise your brand to ensure that the investment creates the outcome that you set out to achieve.

The challenges of the process

However, despite the popularity of this common business strategy, there is a consistent pattern of failure. According to a report from KPMG , as many as 83 percent of M&A’s fail. For example, if the takeover by Kraft Heinz of Unilever had succeeded, it would have been the biggest acquisition in history. However, the US$143 bn deal was averted by Unilever, due to a “clash of cultures.”

Unilever is known for eschewing short-term profits, for its long-term sustainability goals, demonstrated by the millions they invest in branding. Whereas, Kraft Heinz (part owned by 3G Capital), is known for its cost-cutting approach. As the development of the deal progressed, it became clear that the two companies were misaligned and the negotiation collapsed.

Even after a deal is concluded, success is not a given. Key players with options or investors often cash out, creating an exodus of talent and experience. Employees from both sides find themselves in a brave new world, which seems full of promise, but is often riddled with red-tape and new rules. Customers who were once top-of-mind, now find themselves with a new relationship to contend with, and begin to question their allegiance. All in all, the M&A process is fraught with false starts, obstacles and pitfalls. But there is one opportunity, which is often overlooked, that can help to facilitate a far smoother and successful outcome.

A company’s brand is the voice of the business and can be used to anticipate and pacify any concerns. It's visible and tangible helping to project an inspiring picture of the future for all parties. Unfortunately, M&A’s are often brokered by external neutral parties, (usually investment banks), in the interest of fairness. They fail to see the role the brand can play, taking a perfunctory approach at best. When it comes to brand, they concern themselves with who has the best logo, or that both logos must be banished in the interest of a fresh start. Diplomacy may seem gracious, but these third parties are ill-equipped to evaluate the equity of the brand, the hard work that went into building it and the dangers of erasing it.

Pre-merger benefits

Even before an M&A is underway, the brand is the perfect tool to make yourself attractive to future partners. The best brands are a statement of purpose, reflecting your ambitions and the values with which you conduct yourself. This “intent” provides a clear indication to others, whether you will be a good fit and can share a mutually beneficial future.

Migration period

During the negotiations, brand communication can provide an invaluable dialogue with staff and customers. It can address any concerns they may have, providing reassurances and inspiration for the future alliance. The last things a business needs, is to discover that valuable talent and relationships have departed, during the time it took to strike a deal.

Post-merger

After the deal, all stakeholders involved should be inspired and motivated to support the new venture. The brand can be an effective tool to change negative perceptions, or illustrate an exciting future for the new entity. This transition is never accomplished overnight, but with a well-executed brand strategy you will find the new entity will hit the ground running, and anticipated benefits will follow much sooner.

As with many things in business, timing is critical. If M&A’s are part of your business strategy, it pays to start the process of thinking about brand sooner, rather than later, by integrating it into your plans from the start. As with any negotiation, the side who is the most prepared, often enjoys the best outcome.

How to manage your brands post-merger

During an M&A, the discussion as to what to do with the respective brands, will naturally occur. This can be a sensitive part of the process. Discussions about the division of assets is usually a rational one. But the brand is symbolic. Forcing your identity onto another company can harm the relationship. Relinquishing your identity can be an emotional sign that everything you once were, has gone.

Most top businesses are usually aware of the equity within their brand, it’s often an asset that is accounted for, as much as patents or property. But once the statement of intent has been signed, how do you evaluate the future of your brand? Here are the four general approaches to consider.

1. Do nothing

Whilst there are many opportunities to be gained from a merger, sometimes the wisest thing to do is to leave the brands to co-exist. This is an option if there is no conflict of interest between the two brands. Or, even if they are healthy competitors, providing you with a bigger stake of the same market. There may be many opportunities behind the scenes, to streamline operations, or learn from one another. But to the outside world, its best to demonstrate that its business as usual.

Microsoft acquired the professional social network LinkedIn, for US$26 bn. The substantial tech’ deal was aimed at positioning Microsoft closer to people’s working lives. It’s clear to see that both parties have a lot to gain from each other. But there would be no point in imposing Microsoft’s brand ethos onto LinkedIn, and risk alienating LinkedIn’s 467 million users.

This principal was carefully handled in another case, when Coca-Cola acquired part of Innocent drinks. Innocent’s loyal customers saw this as a sell-out, and were concerned that the brand would lose its ethical credentials. Four years on, and the drinks giant’s ‘hands-off’ approach has helped Innocent continue to flourish.

Mergers, but preserve the existing

2. Take one name, lose the other

Some collaborations are not always a merger of equals, in many instances there is a brand that has much stronger equity than the other. In this case, it would be unwise to meddle with the good-will connected to this brand. More often, than not, it's a case of the large absorbing the small. However, sometimes this is reversed, with the “lesser” brand becoming the dominant brand to come out of the merger.

AT&T (American Telephone and Telegraph Company), has been around since the founding of the telephone and became the primary telecom in the US. But the government feared its growing monopoly, so the giant was forced to restrict its growth. Out of this came a small company called South Western Bell, which embarked on three decades of acquisitions and became the conglomerate known as SBC. In 2005 things turned full circle with SBC acquiring AT&T. However, they didn’t absorb it, as they had with so many other companies. Instead, they maintained the AT&T brand, for the deep national resonance that it held with the American public.

Merge and retain one identity

3. Dual branding

Some processes naturally involve a merger of equals, where both parties bring something unique that the other hasn’t got. It's a 1+1=3 situation, where each party has their own specialisation, their specific reputation and customer base. In this scenario, it's wise not to make any sudden moves. Better to let the alignment of the two businesses mature, and observe how the customer responds to the dual entity.

The strategy is often common in the professional services world where, the reputation of a service is paramount; Deloitte & Touche, or Price Waterhouse Coopers come to mind. Both these businesses have been able to simplify to Deloitte and PwC respectively. Time has allowed them to strengthen their name and align their internal culture. Closer to home, Den Norske Bank merged with Gjensidige NOR to form DnB NOR in 2003, and operated as a dual brand until 2011. As the demand for simpler brands has come to the fore it streamlined its brand to DNB.

There is a hybrid of the dual branding approach, which is to take the two visual identities and combine them in such a way, that it creates a new, but familiar identity. When United and Continental Airlines merged, the combined entity took the United name and the Continental globe symbol. This is a very diplomatic approach. Finding a solution that appeased both parties, whilst creating an entirely new competitive brand, could be time-consuming and costly. This “fair-to-all” approach doesn’t work for all companies, and should be investigated thoroughly, rather than make any knee-jerk assumptions.

Dual branding shouldn’t be confused with Co-branding, which is where two known brands come together for a mutual venture, but still operate independently. Fast-fashion retailer H&M has a had a successful history of partnering with the high-end fashion brands such as Karl Lagerfeld and Alexander Wang for one-off temporary Co-branding projects, but they still remain independent.

Merge and combine identities

4. Start again

Sometimes, there is nothing to be gained by retaining one brand over the other. Either there isn’t the brand equity there in the first place. Cultural clashes could make favouring one brand detrimental to the opportunities ahead. Or, the merger forms an entirely new entity, demanding a significant rebrand, to position the new idea into people’s minds.

This “clean slate” approach, does demand a certain amount of courage and a healthy budget to boot. However, there are significant gains to be had, from not being encumbered by the baggage of previous brands. The opportunity to create a new brand, relevant for the times, can be empowering as staff share in building something new. Externally it’s an opportunity to carve a position left open by the established players and create a brand with a fresh and relevant attitude.

In 2010, Deutsche Telekom and France Télécom, announced they would merge their UK Ventures T-Mobile and Orange. This would become a new entity named Everything Everywhere. However, their products and stores would still retain the established brand names. Over a gestation period of two years, the three brands existed in parallel, until the anticipated launch of the 4G network across Great Britain. This was a key turning point in the mobile network market, and a pivotal moment to launch a new brand. The day the 4G network was activated, Everything Everywhere became a holding company. T-Mobile and Orange stores were replaced overnight, by an entirely new brand named ‘EE’.

T-Mobile and Orange were strong brands, but had become entangled in price wars with other networks. The opportunity to change the rules of the game, by offering the faster 4G, provided the ideal opportunity to launch a new brand. EE became a fresh and enticing option overnight, offering a richer mobile experience to customers hungry for speed.

Merge and create an entirely new identity

10 ways your brand can facilitate a successful M&A

Every M&A is unique, and comes with its own prerequisite needs. But they usually create a moment of inflection for both parties, and an opportunity to improve. Utilising branding throughout the process, can have a strong impact on the outcome. Here are some general principles, to guide any business considering an M&A.

Pre-merger

1. Define your future self

Naturally the research, projections, and costings for any M&A, are essential for a successful outcome. As a business, you understand who you are and what you have to offer. But what is often overlooked, is the vision of where you want to be in the future. Start early, by projecting what kind of business you will be on the other side of the deal.

This demands a certain amount of reflection; does this venture align with the purpose of the business? Are you clear about what your brand will stand for? What kind of impact will a second party have on your culture? How will the second party define you to outsiders?

The consequences of such a change can be very extensive, this is as much a creative process as a managerial process. By reviewing these "soft values", you will be able to design a clearer M&A strategy, one that incorporates the vision of the future and gives a sense of what kind of brand you want to become. This will make it easier for you to select candidates for the position e that must be filled, easier to develop good constellations, identify opportunities and not least easier to get to the negotiations with a clearer idea of what you want to achieve.

2. Create the case for change?

With both the business and brand analysis in place, you will be in a strong position to form the ‘Case for Change’. Mergers often fail because the reason for the purchase is ill-defined. After purchasing Motorola for US$2.91 bn from Google, the Chinese multinational Lenovo has still to see the benefit after four years. They recently had to do a U-turn on a name change, and still struggle to provide clear direction for the Motorola brand.

The Case for Change is written by the brand communication team, which becomes a valuable working tool, throughout what can be a long process. It sets out clear reasoning as to why you are doing it, the process for change, consequences to address and the desired benefits to all stakeholders.

Throughout the merger, leaders will be challenged about the idea, from staff, investors, partners and the media. The Case for Change keeps the team focussed and prepared with a consistent story, to reassure and facilitate a smooth transition. In addition it provides a north star to guide the process, so that the venture you thought you entered into, evolves to fruition.

3. Keeping everybody in the loop

The migration period can often be unsettling for staff, particularly with mergers. Rumours and whispers abound, a fear of losing one’s job, relocating and an unpredictable future, can distract the entire workforce. Valued people tend to take matters into their own hands, and find a new employer, rather being victim to changes beyond their influence. External stakeholders, particularly customers, can be sceptical of the deal, they may feel they are not prioritised, or worse see it as a time for them to consider other vendors.

Managing expectations in the transition period is critical. Developing a dedicated communication strategy for key stakeholders can overcome unnecessary misapprehensions. It’s not simply a question of informing people, it’s about making them feel valued, reassured and inspired with the new entity that will emerge from the M&A.

Again, the Case for Change document will provide the source material. But there are other initiatives. Use your employer brand and subsequent internal channels to inform people, hold events to describe the vision, process and opportunities, make it visual and inspiring. Coordinate this with PR to create a consistent message and most importantly - build trust.

4. Brand integration

The role and future of both party’s brands will need to be considered. Sometimes, there is time to make the decision further down the line, but often it is time sensitive and needs a plan of action. It’s a good idea to form a brand integration team, bringing those responsible for the respective brands together, to learn about each other’s situation. This helps to forge relationships, and work through the process together. It’s an early demonstration of both companies operating as one. Whichever way they recommend, to take your brand forward, support from top-management is essential. Providing them with the mandate to think big, make the bold changes required, and maximise the potential is key to good integration. It also provides a very visible example of both entities, working together as one.

5. Practical details

Legal issues concerning which name, or which logo you will go by, will need to be acted on quickly? Certain orders, such as uniforms or branded vehicles, will need to be postponed. As corporate websites become more central to business operations, you’ll need a plan for how to teach brand merges digitally. These are all issues that, if not anticipated, can make a merger look ill-conceived when activated and incur a back-lash.

6. Prepare for launch

It’s understandable that leadership can be preoccupied with the details of the merger, and lose focus once the deal is signed. But this is a crucial time, when all eyes are on the new entity, failure to live up to expectations can undermine confidence inside and out. Developing a launch plan, is essential to gaining strong momentum and being market ready. 

7. Internal launch

By now the brand team will have defined the new identity, senior leaders will be informed of the changes, and a soft, or hard public launch will be agreed. The talk is over and it’s time to deliver. The newly aligned workforce will be your best ambassadors, it’s important to involve them in the change, describe why the brand is the way it is, and how it will facilitate the business strategy. Gaining their support is key, particularly now that so many staff represent the business through social media. They will be confronted with questions that they need to be trained to answer. Internal presentations, be it physical or video, are a good way to show the new identity in context with other business strategy and provide the ‘back-story’ that staff can use to explain the changes and potential that lies ahead.

Staff with a direct involvement with the new brand, will need the tools to bring the new brand a life, with a visual identity system and brand guide. Beyond this, an employee engagement program will help to align the two cultures, direct staff in their new roles, retain talent and help to build a united culture going forward.

8. External launch

Bringing the brand to life can never be underestimated. This is the moment you will face scrutiny from customers, competitors and the media. We don’t recommend hype, but we do encourage clients to be prepared to guarantee a strong outcome. Customer support is critical so informing them of how the M&A will not only maintain consistent standards but add value to their relationship will go a long way. In some instances, this can be handled by a personal letter, but in others it may be important to form an event around the changes and give valued customers and opinion formers the VIP treatment. This will provide the chance to collect feedback, learn from their perspective and address any of their misconceptions.

Conversations about the changes will naturally occur, particularly about new logos, (they’re an easy target for lazy journalists). A Content Strategy should be in place to direct the conversations towards your agenda. The merger may have involved radical changes, you will need to drive the discussion to stimulate awareness, and build positive interest towards your new offering and ambitions.

“Don’t assume that once the dust settles you can take your foot off the accelerator.”

9. Statements of intent

Once people have learned of the merger, they will expect improvements. This is an ideal opportunity to demonstrate the power of the venture. Every business has key touch-points that provide an example of their customer experience. It could be your website, a product, your reception or a retail experience. Redesigning one, or several, of these experiences, allows you to define the new standard set by the new partnership, providing a visceral statement of intent. These examples can generate a fresh sense of pride. They can maintain customer loyalty, and attract new customers who are inspired by the new benchmark.

10. Maintain momentum

Finally, don’t assume that once the dust settles you can take your foot off the accelerator. Smart brands engage with pace, they know that once they’ve had their turn in the spotlight, and the merger becomes old news, attention will turn to competitors. If you don’t have anything to engage the market with, the M&A will soon become a distant memory, or in worst case people will say, “things were better before”. Plan for some easy wins, to keep the brand top-of-mind in its first year. This will demonstrate that there is genuine dynamic change within the new entity, and help to earn a positive position in the market’s consciousness.

In today's slow growth economy, many businesses are on the look-out for top quality acquisitions that will add to their bottom line. This means making your company as attractive as possible, which is in fact, the very essence of branding.