In 2018, there were more nearly 50,000 M&A transactions around the world. From tech to healthcare, consolidation is on the rise, and companies small and large are placing their bets on M&A activity as a strategic driver of growth. In this environment, it’s safe to assume that most B2B organizations will experience some form of M&A activity at some point. But given that 83% of mergers and acquisitions fail, success is by no means a given.
In this environment, brand is a critical, yet often overlooked, success factor. Even the strongest rationale for a combination will never be enough for the new entity to succeed. The financial reasoning for M&A must be translated to a convincing benefit all key audiences can get behind. Successfully merging two B2B brands means translating a financial transaction into a relatable story that resonates with the marketplace, provides a narrative that all employees can rally around, signals change and a new path forward, and builds a common culture between two previously divided organizations.
Whether you’re embarking on major merger that calls for a brand overhaul or you’re undertaking an acquisition that is smaller but significant enough that a brand refresh would be more appropriate, brand should be at the forefront of your strategy. But as with any aspect of a merger or acquisition, successful M&A branding is by no means a simple undertaking. B2B organizations need to consider the scope of the rebranding effort from brand positioning to visuals to name to brand architecture and then do the hard work of making it happen.
So what does successful M&A branding look like for B2B organizations? And how do you get there? Read on to learn how to merge two brands, from research to developing the brand building blocks to launching the new entity with communications and marketing.
The most important element of building a new brand when an organization undergoes a significant merger or acquisition is understanding what unites the two organizations and how to communicate those connections most effectively. Determining what to emphasize depends on both the nature of the transaction and the characteristics of both organizations.
Although research is critical for any branding initiative, when two existing organizations with unique histories and legacies are involved, gaining an in-depth view of the strengths, weaknesses, cultures, and perceptions of each company is extremely important. Research can also test hypotheses and uncover issues or challenges that a new brand can address, such as cultural misalignment, areas of competitive weakness, and marketplace misperceptions or concerns. Additionally, employee awareness of and participation in research can also allay any uncertainty about the forthcoming combination and drive early buy-in for the new brand.
Successful M&A branding research should take into account the perspectives of current employees, clients, prospective clients, and the marketplace at large to understand the essential DNA of both organizations, where there’s overlap, and how each company’s unique characteristics translate to customer and marketplace value. By conducting both internal and external research, organizations can understand how employee perceptions align to those of the marketplace at large and uncover areas of opportunity for communicating a clearer or more differentiated message.
Research should also include both quantitative and qualitative measures, including internal and external surveys as well as audits of existing materials, a competitive and marketplace review, and one-on-one interviews with leadership and clients. They should also include workshops that leverage creative prompts, including visual stimuli, that encourage participants to arrive at perspectives that are generally more insightful than those that come from answering straightforward interview questions. Conducting multi-faceted research will ensure that you have the full picture and needed dimension needed to develop a differentiated brand that appropriately reflects the strengths of both organizations.
In a recent project focused on the combination of two long-standing organizations in the chemicals industry, an in-depth, comprehensive approach to research gave us the rich perspective needed to build a powerful brand for the new entity. For example, internal workshops asking employees to identify each organization’s primary archetypes from a list developed by the psychoanalyst Carl Jung revealed the opportunity to make a shift in the new brand positioning. Given the highly innovative nature of the firm, it was clear that the brand positioning needed to move beyond the current Caregiver-archetype messaging of customer service and support to incorporate messaging more aligned to the Creator and Sage archetypes.
Quantitative research added further dimension to that finding, revealing that while clients were somewhat ambivalent about innovation for innovation’s sake, they were looking for a partner that could incrementally modify, tailor, and evolve solutions alongside their changing needs. In other words, the new brand needed to frame innovation within the context of client challenges.
M&A activity represents an important storytelling moment for an organization. Though what both organizations do (for example: offering legal counsel, providing economic consulting services, running an ad tech platform) may be a good starting point for developing a brand positioning, it’s not enough to form the basis of a differentiated brand that resonates. A more compelling narrative emerges when you dig deeper: how the future entity will operate, what its people believe in, and why it does what it does. In other words, differentiated brands articulate higher purpose that both customers and employees can rally behind. Again, research is critical for uncovering the more substantive story beneath surface-level capabilities and services.
When that story is determined, its direction and spirit of needs to come through in everything the organization says and does, from the positioning statement to the tagline to the messaging. We like to tell our clients that you only get one brand. However, to ensure relevance and resonance, that brand needs to flex to express itself somewhat differently to different audiences: investors, analysts, media, clients, prospects, employees and recruits. Research not only establishes what message should rise to the top, but also what matters to a brand’s different constituents as they’re seeking to understand what the new entity can deliver.
For example, in the case of the combination of the two chemical companies, we ultimately developed a brand positioning highlighting the organization’s emphasis on client-centric innovation. While research showed that this was a message that widely resonated, we needed to adjust it slightly for different audiences. For example, for the investor audience, we focused on the new entity’s significant investments in R&D and its innovation roadmap. For employees and recruits, we highlighted the benefits of its creative culture. For clients, we emphasized a drive for constant improvement and advancement. The underlying message was the same, but communications were nuanced for maximum impact.
Name is one of the most important components of a brand. It’s key to cultivating positive associations and differentiating one organization from another, and never is it as important as when embarking on a major merger or acquisition. During M&A activity, a brand name signals important information about the nature of the combination. Whether an organization plans on keeping one of the two legacy names, combining all or parts of the legacy names, or developing an entirely new name, each option has very different implications for how the combination will be perceived by the marketplace and how hard the rest of the brand elements need to work to communicate the new entity’s value proposition.
For example, retaining one of the legacy names as the brand name will indicate that one organization’s value proposition is more important than the other. In this instance, the brand positioning may need to work harder to communicate that that there is indeed a new story to tell though the entity is operating under a name familiar to the marketplace. On the other hand, coming up with an entirely different name will signal that the new whole is greater than the sum of its parts and that the combination is a complete departure from the past. In this case, the positioning will need to work less hard to communicate change.
Research should determine not only the strategy you take but also help you land on a name that will resonate. Qualitative and quantitative research are critical steps that allow you to understand the kinds of names to explore and, ultimately, which option external audiences will identify with most.
In the case of the merging chemical companies, it was determined that given the significant brand equity of both organizations and the complementary nature of each of their offering portfolios, a new brand name that clearly combined the brand names of the two legacy organizations would be the best option. Quantitative research with the organizations’ existing customer base confirmed that they clearly preferred a combination of the legacy names rather than a new name altogether. This meant that when the new entity launched, the brand already benefited from more than a century of established brand equity.
Bringing together two separate companies means bringing together two completely different portfolios, whether that includes services or products, unbranded offerings or established brands. Developing a coherent brand architecture is critical given its operational implications as well as the role it plays in communicating the new entity’s value proposition and priorities. Despite this, many combining companies fail to correctly rationalize and integrate portfolios, to their detriment. In the midst of a significant merger or acquisition, not only does rationalizing portfolios improve internal efficiency, but it also reduces uncertainty or confusion.
It’s important to not underestimate the complexity of this effort and the importance role research plays to ensure that all decisions are backed by data, rather than emotions. Research will determine the right organizational structure for the new portfolio and ensure it supports the rationale for the merger. Considerations such as cross-selling strategies, existing brand equity, and profit potential will uncover the right relationship between the new master brand and secondary offering brands, establish an effective nomenclature strategy, and ultimately unlock the value of the combined portfolio of offerings. In the case of the merger of the two chemical companies, there were thousands of products that to consider, and many overlapped. By identifying three potential architecture pathways and leveraging research to dive into the pros and cons of each area, we were able to arrive at a decision to vastly simplify the portfolio.
When it comes to M&A activity, there’s generally a high degree of uncertainty. Though there are often significant restrictions on what can and not be communicated before a combination goes live, developing an internal communications strategy to keep employees apprised of progress and what they can and cannot expect moving forward will ease any uncertainty. It will reassure them that a new brand is on the way to support the M&A activity and that they will have the tools needed to not only understand the new organization but also communicate about it to their clients.
If there’s one piece of guidance we offer consistently to our clients, it’s that B2B brands are built from the inside out, and nowhere is this more critical than in M&A branding. In an M&A transaction, a brand can quell uncertainty by galvanizing employees around the new vision and helping them understand what the new brand means to them. Additionally, brand is a powerful lever of cultural integration, which, according to Harvard Business Review, is one of the top reasons mergers fail. A powerful brand narrative can brings together different workforces around a common purpose and then inspires them to live the brand and spread the world to clients.
But it doesn’t happen by accident. When working with clients, we employ a range of tactics to rally employees around a brand, including in-depth workshops that provide education on the rationale behind the brand and tactics for incorporating it into day to-day work. We also develop internal-facing brand tools, like brand guidelines and messaging frameworks, that serve as quick and easy references to help employees embrace the brand positioning.
A well-coordinated brand launch will set the tone for the future entity and can be the difference between a brand that takes off and one that doesn’t. Working to make sure that all employees and key external audiences have an understanding of the new brand and feel galvanized and inspired by its launch will lay the foundation for success.
Powerful brand launches should begin by generating a sense of excitement and anticipation in the weeks leading up to the event, with pre-launch communications that build toward the culminating moment, either driving to a launch event or slowly revealing portions of the new brand, such as the name of the logo, in a drip-like communication strategy. On the day of the launch itself, external activities like ringing the bell for the New York Stock Exchange or media interviews should be supplemented with internal activities like a launch party or desk drop explaining the new brand.
Once a brand has been launched, it’s important to sustain the momentum. Establishing the right processes will ensure that a brand continues to flourish. Ongoing ad campaigns, internal training, brand councils, brand-related awards programs, and brand performance measurement initiatives are all ways to ensure your brand has life over the long term.
For more information about how to merge brands, contact us.
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