Brand consideration in M&As.

Strategic management of your brand during mergers and acquisitions (M&A)

Thu, 20 Sep 2018

A merger and/or acquisition (M&A) is a transaction in which the ownership of a company, and their operations, is transferred or combined with another organisation.

There are a number of strategic factors influencing an organisation’s decision to venture into a merger or acquisition. It could be a tech-led merger or acquisition to gain a strategic advantage in a particular technology, a move to counter a competitive threat or gain operating efficiencies, a rapid growth strategy or an opportunity to enter into a new market. In many cases, the brand is of little consideration and is often an afterthought once the M&A has occurred.

Consideration of the brand implications is imperative. A plan or map for creating a market-ready brand that sails through the journey and ports from pre-deal to post-deal can be as important as the financial cost of the deal.

 

There are several considerations when determining the right brand strategy during or post an M&A: 

- What is the long-term cost/benefit of each of the organisation’s current assets including brand reputation and value? 

- What is the current position, strength and value of each brand in the newly formed organistion’s brand portfolio?

- Considering what the newly formed organisation looks like, what is the new strategic direction? What are the long-term goals?

- What are the customer expectations and how will the M&A impact the loyalty of existing customers? 

- How does/do the newly acquired brand/s fit within the existing brand architecture?

 

After considering these factors, a strategy for the direction of the brand or brands in question can be more effectively articulated and executed. Unfortunately, these decisions are not always made using strategic insight and solid brand architecture strategies. Often the brand team is not engaged until after the deal has been done by the legal departments, CEO and CFO who then direct the brand team to adopt a solution without giving them strategic input.

In terms of brand strategy, there are a number of strategic approaches the newly formed organisation can take in terms of branding:

1. Status quo - leaving all the original brands as they are and running the brands independently as they had been operating prior to the merger or acquisition.

This approach can work well if the brands in question are entering the deal as equals, with unique customer propositions, equally strong brand equity, and solid foundations for growth and prosperity. For some brands that have been acquired by a strong parent company, there can often be a halo effect for the smaller brand with a renewed confidence that the strength of the parent company can add extra benefits to the acquired brand. If this is the path your organisation decides to take, you will need to consider your overall brand archetecture and ensure all the pieces of the puzzle fit together in the best way possible so each brand can leverage off their relationships with each other.

Examples of brands that have been successful in this approach include:

St George - merger with Westpac
Ben & Jerry’s and Dollar Shave Club - acquired by Unilever
YouTube - acquired by Google. 

2. Survival of the fittest - when one of the parties within the M&A deal is stronger than the other, there is often what appears to be an aggressive take over where one brand reaps all the benefits and the other dwindles away.

This approach has a lot of internal efficiencies - especially in terms of marketing budget and other operating efficiencies, however it does risk appearing hostile and can result in employee dissatisfaction and loss of customers who were brand loyal.

Examples of brands that have disappeared due to a merger or acquisition:

Integral Energy - purchased by Origin Energy
Airborne Express - purchased and rebranded to parent DHL
George Patterson – merged with Young and Rubicam (Y&R)

3. Fusion or hybrid brand – when two brands are relatively equal - or the merging organisations are both passionate about their own brand leading the way in the new organisation, some companies agree to create a fusion brand or a hybrid of the two brands.

In most cases, this can look like a mish-mash that has been smashed together without any thought – resulting in a loss of any brand equity that the two may have held. However, this fusion approach has worked successfully for organisations where both brands are extremely recognisable and they have complimentary values and benefits. The two examples provided below show how this has been achieved and successfully executed – leveraging the strengths of both brands.

Examples of brands that used this approach and succeeded:

Disney-Pixar
Exxon-Mobil 

4. Transformation - a new brand for a newly formed company - perhaps the most drastic option for branding after a merger or acquisition is to create an entirely new brand.

This option presents a unique opportunity for the new organisation to go forward with a new vision, a new identity and a fresh approach. This option can create unity internally with all employees starting in a common place. However, it also means starting from scratch in terms of building brand equity and customer loyalty, so this approach would predominantly work for an organisation that plans to undergo a significant transformation.

If the vision of the newly formed organisation has outgrown the brands involved - then this transformation strategy is definitely one to consider. It is not an overnight fix. It has to be planned, considered and rolled out over time. The strategy should consider the phasing out of the previous brands and the right approach to transition customers along the journey. The result of this approach, when executed effectively, is a strong, united and confident new brand that can take the company into the future.

Some of the brand transformation projects worked on at BrandMatters include:

Goldman Sachs Asset Management now Yarra Capital Management
Fleet Partners now Eclipx Group

Read more about these and other rebrand projects completed by BrandMatters case studies

Bringing in an independent agent or agency to assess the current position and make a recommendation on future strategy from a brand perspective can make or break the success of the post-merger organisation. Whether you are mid M&A or at the beginning of the process, BrandMatters can help you uncover and articulate the right brand strategy and brand architecture to lead your organisation to success. Explore our case studies to see how we’ve helped other organisations, or get in touch to discuss your unique situation.

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