How to not butcher your brand during Mergers & Acquisitions

Avoid killing your brand!
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Acquisitions and mergers represent an extremely vulnerable time for any brand – and still, way too many B2B companies neglect their brand in the process. The procedure kills countless brands but if you navigate the process intelligently, it can result in a stronger brand and a strengthened position in the market.

For executives who want to accomplish higher growth, mergers and acquisitions are a clear-cut tool to capture new market shares and realize growth goals. But it’s super hard – with good reason. Way too many mergers fall short or fail entirely. According to Harvard Business Review, 70-90% of all mergers fail, which is equally frightening and discouraging – and the implications are worst for the brands involved.

To put it briefly, mergers are a slaughterhouse for brands. Too few companies are able to guide their brands unscathed through the process. And the result is poorer brand recognition and a weakened market position.

B2B brands suffer especially during mergers and acquisitions. The poor focus on branding in B2B is clear during M&A and the companies consequently underestimate their brand’s significance.

Understand the brand mathematics

As a rule of thumb, mergers and acquisitions are based on analysis of business advantages, market conditions, and operation synergies. In other words, it’s a process dominated by Excel fanatics without the slightest understanding of, or interest in, branding. And this is the core of the issue.

You need to understand each brand’s DNA and the best constellation for it to fit in.
Mette Hejl CEO & Partner

A successful M&A process is equally based on the ability to pair your business strategy with your brand strategy. If the two don’t interact, your brand’s survival rate is close to zero.

If you want to succeed in creating a solid brand in the aftermath of an acquisition or a merger, you need to include characteristics of every brand in question. You need to understand each brand’s DNA and the best constellation for it to fit in. And if you aren’t able to yourself, team up with someone who can.

This is true for any transitional period where the brand undergoes a radical change – no matter whether it’s a generational succession, changes in top management, economic turn arounds or during fundamental changes to the market conditions where the brand undergoes significant changes. If you don’t protect your brand, it will hurt your business.

#1 Status Quo: Live and let live

Generally speaking, you have four options when leading your brand through an acquisition or a merger.

The first option is the ‘status quo’ method. Basically, this means not making any changes to the brands involved. You want to produce the perception in the market that the acquired brand is still an independent company. Nothing changes. Everything stays the same.

The ‘status quo’ approach is at its best when the brands involved are clearly different. Either because they offer different products or services or because they offer similar services to different segments.

A good example of this strategy comes from the world-wide company Proctor & Gamble that houses 48 world-famous brands – including Braun, Pampers, Ariel, and Gillette. Each its own brand.

The brands can focus on individual markets and if one company receives bad press, the others don’t suffer. On the other hand, the approach is quite costly as each brand must be marketed individually. In addition, potential brand loyalty won’t carry over to the rest of the ‘family’.

#2 The fusion: Best of both worlds

The ‘fusion’ does exactly what name says. Several brand identities merge into a new one. The ‘fusion’ approach can happen in several ways depending on which brand is most important.

For example, one name can appear first in the union. Another way is for one brand’s logo to be removed while its name remains in small writing under the other brand’s better known logo.

The pharma brand GlaxoSmithKline is a product of the ‘fusion’ approach. In 2000, Glaxo Wellcome and SmithKline Beecham merged and the result is a name that takes into account the heritage of both companies.

An M&A process offers a clear-cut opportunity to look more closely at the potential of creating a new brand.
Mette Hejl CEO & Partner

In general, the ‘fusion’ is a diplomatic solution when every party wants some of their legacy to be preserved. Unfortunately, you need to look far and wide to find textbook examples of ‘the perfect compromise’ and most likely, you will end up biting off more than you can chew.

#3 Biggest and best: Survival of the fittest

The ‘biggest and best’ strategy emphasizes one brand over another/the rest, based on consideration regarding size, brand heritage, market perception, brand potential, and similar factors. Typically, the emphasized brand will have launched the acquisition of, or the merger with, another company. However, there are reversed examples where the absorbed brand is so valuable or has so much potential that the company has more to gain by putting it in front.

Most know of the oil company Shell, and the brand is good example of the ‘biggest and best’ method. Behind the Shell brand stand the less idiomatic brands British Royal Dutch Petroleum Corporation and Dutch Shell Transport & Trading that merged to form Royal Dutch Shell, which has since become the powerful Shell brand.

The ‘biggest and best’ approach offers clear brand communication but it can also end up alienating customers with preferences for the weaker brand.

#4 New brand: Clean slate

An M&A process offers a clear-cut opportunity to look more closely at the potential of creating a new brand. Unfortunately, naming a company is no easy task. It’s expensive and demanding. And there is risk involved in building a brand from scratch. On the other hand, you are free from any brand legacy and brand bias, and you are free to create exactly the position that supports your business strategy the best.

The biggest challenge in creating a new brand is that everyone will have an opinion about the new name.

Verizon is one of the world’s largest telephone operators and is a very strong and well-known brand in the US. The brand was born in 2000, when FCC Bell Atlantic Corp acquired GTE Corp and created the new brand after the consolidation.

By choosing a new name, the companies avoided the worst criticism for forming the largest telephone cooperator in the US and the following negative reactions to the size of the company, and the implications for general market competition. Instead they started out fresh with a name that combines the Latin word for truth, ‘veritas’, with ‘horizon’.

If the group of people who lead your M&A process lack insights in branding, you might as well be doing jumping jacks on thin ice. The result is probable and unpleasant.
Mette Hejl CEO & Partner

Take advantage of the full potential

Mergers and acquisitions offer great financial potential but if you want to reap the full potential, you need to understand and utilize the right brand architecture while securing an intelligent and determined implementation of brand changes.

Remember to set aside time and energy to strengthen the brand internally. Just like customers, your employees attach strong feelings to brands. Your company’s brand is crucial to how your employees perceive your business foundation and it forms the basis of your company’s values. So, major brand changes will always have consequences for your employees.

If the group of people who lead your M&A process lack insights in branding, you might as well be doing jumping jacks on thin ice. The result is probable and unpleasant.

Your company’s reputation and perception in the market is a deciding factor as to whether your customers prefer you and whether you can successfully attract high-quality employees. That is why your brand strategy should be at the top of your priorities when facing a merger or an acquisition.

Alternatively, you will be sending your brand to the slaughterhouse and you will likely see the effects all the way from crippled revenue to a diminished bottom line.