Identity Issues: Why Brand Can’t Be Ignored During Corporate Break-Ups

Restructuring of any kind is never easy, but brand can make the transition a lot smoother.
quarter cut in half

As behemoths are built, so do they separate. Corporate spinoffs are often in the news these days. From Bayer, to HP Enterprise, to DowDupont, many major conglomerates are spinning off divisions in hopes that narrowed focuses will result in easier management—and thus, higher profits. Siemens AG is one of the most prolific dismantlers, carving out multiple businesses, including health care and appliances, since 2013. Its most recent announcements: it is weighing its options about carving out its gas and power businesses. However, while investors welcomed the announcement, others worry that in the wake of spinoffs and mergers, “exactly what defines the company remains opaque.”

Breaking Up Is Hard To Do

While the gas and power spinoff seems like a home run for investors, the implications from a brand perspective are less clear. Restructuring of any kind is never easy. In the Siemens case, the creation of a new publicly traded entity is a huge change, one that may generate more questions than answers. This is especially true for employees and clients who will want to immediately understand what this restructuring means for them.

From a corporate perspective, the focus will initially be on who gets to keep what. Assets are broken up in what is too often a chaotic and emotional process. When the dust settles, issues arise that are not so easy to solve. In the past, as part of a larger entity, the new company’s identity largely came from the corporate brand. Now, the new entity must figure out what part of the past to move forward with, how to make up for what is left behind and what should be completely new.

As publicly traded companies, they will face intense scrutiny from the beginning – not only from clients and employees, but from investors and the media as well. That’s a lot to handle all at once. Without a clear and consistently communicated vision and value proposition – in other words, without a brand – it will be hard to rally these stakeholders.

Same, Same, But Different

And therein lies the true challenge, and opportunity, of any corporate break-up: same business, same people, different story. The change in business strategy that comes with any major restructuring is really just the first step. When business strategy changes, so too must the brand. Only when the two are aligned can a company realize its true growth potential.

For more about how brand can help ensure the success of a corporate spin-off, contact us.

Share This

A Tale of Two Announcements: Communicating Big News at Large Organizations

Two regional banks’ futures are on the line, and all stakeholders await the decisions of the top brass: will a merger-of-equals result in lay-offs? At large firms today, most communication happens through email, and that’s how a lot of news is delivered (hopefully employees never have to learn company news via…

For M&A Success, Put Branding in the IMO Loop

When large, complex organizations combine – whether through M&A or internal reorganization – a strong new brand can be the essential glue that holds the new entity together, both internally and in the minds of customers.

But a new brand is just one element in the successful integration of two organizations. There are myriad other…

Seven Principles for M&A Branding Success

From a business perspective, few things are as critical to get right as a major merger or acquisition — and few things are as challenging. On the long list of considerations during M&A activity, merger branding is one of the most crucial. Not getting brand right is a key reason that, according to the…