Despite the M&A market reportedly being at a 20-year low during the first half of the year, H1 has seen a string of notable moves from brands including luxury fashion houses Versace and Prada, food delivery giants Deliveroo and Doordash and, most recently, global FMCG icons, Ferrero and Kellogg, which hit headlines last week following the $3.1bn (£2.3bn) acquisition announcement.
While M&A activity ebbs and flows with the market, it continues to represent a promise to accelerate value creation – through expansion to new markets, efficiencies of scale through consolidation and strengthened competitive advantage. Yet we consistently hear that so many M&As fail to fulfill their promise, with a staggering 70-90% failure rate. Why? Put simply, because many make the mistake of under-valuing the importance of brand during this shift: how the brand will be defined, how it’s going to guide customers and employees through the organisational change and how it’s ultimately going to help guide the new entity to success.
Using brand as a strategic compass
In any merger or acquisition scenario, how the resulting enterprise will be branded is a consideration often left until the transaction is done and dusted. That’s too late and, frankly, myopic. A brand is more than a name and logo. While a brand includes those elements, more importantly, it defines a vision for both internal stakeholders and customers that acts as a pathway to success, guiding decisions from the strategic to the basic. Granted, the M&A process is complex and CEOs and leadership teams are confronted with overflowing to-do lists covering tasks from operational issues pertaining to cost-rationalisation to the integration of corporate functions. We get it. But brand is the essence of a company. It would be a mistake to overlook it.
Deploying the right strategy can inspire new customers during a period of change or, if not approached correctly, can push away loyal fans. Amid a merger or acquisition, the last thing you want is for your customer base to feel lost at sea. Instead, brand should be considered the strategic compass, guiding everyone inside and outside an organisation towards the future. It should provide clarity for the purpose of the merger or acquisition and inspire confidence in the direction the new entity is moving. You only have to look at the brand-savvy leaders of GE, IBM and 3M to see why this works. They put brand at the centre of their integration decision-making and used it as their north star to successfully bring firms together and create meaningful and enduring impact for the new entity.
How to prioritise brand in the M&A process
Where should you start? With the business strategy. Ahead of the pre-deal announcement, brands from both sides should be analysed through the lens of the new strategy. In a merger, there will be things that remain true about both brands that will need to carry forward and there will be new, carefully selected elements acting as a beacon shining the way for the merged entity to follow.
Similarly, as part of an acquisition, both the parent and acquired brand must consider the messaging implications and inferences of the new business arrangement. While it may be tempting to look back and celebrate the history of the previous companies, this may not work for the future. It can be particularly difficult to shed the rich histories and legacy brand attributes of larger companies, but if that history is no longer relevant for external audiences, it needs to be let go. Conversely, shared cultural truths can be a defining trait of the new venture and should be captured as such in the resulting brand.
Brand is more than a name and logo. It defines a vision for both internal stakeholders and customers
Brand becomes a critical tool here for fostering new emotional engagements, uniting different cultures and creating a common decision-making approach for employees and management, more prominently during a merger. Don’t enable an “us versus them” mentality. Instead, business leaders must flip the situation, approach the move as an opportunity to build on two existing legacies and use the heritage as an input into the result. Psychologically, this brings all employees onto a level playing field and into neutral and unknown territory. From there, the new brand – with its message, vision and purpose – can be used to direct all levels of the company towards the common goal of making the merged entity successful.
Businesses must consider the customer and the benefits of the transaction through their eyes. Then focus on the touchpoints that will have the greatest impact, relative to the effort and investment required to change them. Merger announcement stories, FAQs and internal working sessions are all good strategies to implement early to acquaint all relevant parties with the new brand. By working in this way, the brand will immediately feel refreshed and reinvented, reflecting your new messaging without breaking the bank.
Mergers and acquisitions are expensive, time-consuming processes. With a strongly defined approach to brand, leaders can ensure new entities move smoothly through periods of transition toward long-term success. Used as a touchstone for setting the integration agenda, brand can separate winning deals from disappointing mashups doomed to fail.
Michael D’Esopo is the CEO of Lippincott, a brand consultancy
Despite the M&A market reportedly being at a 20-year low during the first half of the year, H1 has seen a string of notable moves from brands including luxury fashion houses Versace and Prada, food delivery giants Deliveroo and Doordash and, most recently, global FMCG icons, Ferrero and Kellogg, which hit headlines last week following the $3.1bn (£2.3bn) acquisition announcement.
While M&A activity ebbs and flows with the market, it continues to represent a promise to accelerate value creation – through expansion to new markets, efficiencies of scale through consolidation and strengthened competitive advantage. Yet we consistently hear that so many M&As fail to fulfill their promise, with a staggering 70-90% failure rate. Why? Put simply, because many make the mistake of under-valuing the importance of brand during this shift: how the brand will be defined, how it’s going to guide customers and employees through the organisational change and how it’s ultimately going to help guide the new entity to success.
