Brand mergers: Four key things to consider
The third quarter of 2021 broke all merger & acquisition records globally. And the deal-making in 2022 dropped off by only 2% from its peak the previous year. But what happens after the event? Studies have shown that in as many as 60% of mergers, shareholder value is destroyed. (forbes.com)
And while there are many reasons for mergers failing, successful brand integration is one of the key – and often overlooked – determinates.
In this article, we’ve once again sought the insights of Merger & Acquisition financial expert – Stuart Fitzgerald, CEO of Fitzgerald Power. As we discuss four key aspects of branding to consider, to make your merger a success.
And get the best value from your brands post-deal.
A common issue is how late in the merger process it can be, before branding and brand integration can be considered.
Stuart explained why that can be.
“While from an outsider point of view, the name and logo are such massive things that people kind of assume their integration must be front and centre in all conversations.
When you are involved behind the scenes, the actual merger process is so much more technical. In reality, it is all the tangible and intangible elements that need to be valued and negotiated that are the key focus.
Decisions on how the brands will be integrated often has to be kicked down the line as one of the things that can be ironed out later. And often, it’s only after the deal is done, that people have the headspace to start thinking and strategizing about what to do.
Unfortunately, this can mean, brand integration issues arising quite late in the process. For that reason, I think there are huge advantages to thinking about it earlier in the process, if you can at all.
And one of the first thing I’d say to someone embarking on a journey of buying, selling or merging businesses is to start familiarising yourself with all the options now.”
When we are facilitating brand merger strategy workshops, this is where we start. By making sure all options are laid out, understood and put on the table for discussion and consideration.
There are four main strategy themes – back the stronger brand, blend the two brands, create a new brand and no change.
And within those core strategy themes, there are various variations and ways you can execute both the backing of the stronger brand or the blending of the two brands. This graphic from Bailey Brand Consulting, offers a fantastic overview of each option.
“The next thing is to really understand what the cost/benefit implications of your decision are.
Both brands – both reputations – have an intrinsic value. But there is a cost too, to maintaining two separate brands.
From my point of view, as the financial advisor, I want to see clients realise the maximum efficiencies they can without compromising or diluting that value.
And make sure that if the choice is made to run two separate brands, it’s done so for the right reasons – because it’s the right strategic decision to do so.”
From our point of view, at TOTEM, choosing to maintain two separate brands, is the right strategic decision, where both have completely different offerings with different target audiences.
But, in reality, we often see this option selected almost by default – where organisations haven’t had the time to properly consider alternatives, so they just leave them roll on as separate brands.
However, they tend not to roll on as equals in these cases. Invariably, one brand will be the lead one and invested in more heavily. And eventually, the other brand will begin to struggle. By waiting until it hits this point, the damage done to reputations and customer loyalty can be unrepairable.
The value lost, may not be retrievable.
That’s why we are huge advocates of bringing these strategic brand decisions into early integration planning and negotiations.
Putting the customers at the heart of branding decisions, is what we’re all about in TOTEM. Placing yourself in their shoes, understanding their perspective and empathising with them is the only way to make sure that your products, your services and your brand meet their needs.
Whichever option is the right fit for your organisation, it should be chosen because it will best serve the needs of customers. And a brand communication and loyalty plan should be mapped out to make sure you take customers on the journey with you.
But we’ve found that this customer centric approach, can get lost in mergers and asked Stuart, if he’d observed anything similar…
“In a nutshell, yes. The customer often probably isn’t as front and centre as they could or should be. In mergers and acquisitions, there can be a lot of internal emotion.
The brand can be someone’s family name above the door. Staff can be very attached to their existing logo and identity – they’ve put so much hard work and time into building it. And can feel understandably protective of that.
People can also just be overwhelmed by the magnitude of the task ahead if they rebrand. The sheer volume of collateral and elements that would need to be re-looked at, reprinted and redesigned.
You’re asking a team, to dump everything they’ve spent all these years building up. And that brings up another critical point for me – the employees.”
“One of the most overlooked reasons I’ve seen mergers fail, is because of culture fit. Or lack of it. Especially in service-based businesses. And when they try and combine teams and organisations, it just all goes wrong. There’s no chemistry.
A very high-profile example of this, was the attempted Daimler and Chrysler merger, where a cultural mismatch of German and American values and ideals, were cited as the key cause for failure.
From different communication styles, decision making processes, general methodologies and philosophies and compensation disparities – nothing gelled. Neither company could conform to navigate their way to a new shared business culture. They were too far apart.
For me, I think culture is something companies should give serious consideration to at the outset when planning a merger.”
From our point of view at TOTEM, this is where having a clear and strong employer brand is critical. Your employer brand is your reputation among the workforce – how you are perceived by your employees. It’s affected by all aspects of the employment experience.
Change is difficult. And it’s easy for morale to dwindle, for people to feel purposeless, or overlooked in the merging process.
Ask yourself why did you merge? What is the new shared purpose and vision? And do your employees understand that and feel motivated to be part of it?
Having a clear direction post-merger and clearly communicating that across the organisation in a compelling way, we believe will be critical to your success. To retaining talent and creating an environment where people and careers thrive.
If you’d like to talk in confidence or book a session with our strategy team to get clarity on where your brand is going, contact our business manager David on +353 58 24832 or email [email protected].