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 the brand right is a key reason that, according to the Harvard Business Review, between 70 and 90 percent of mergers and acquisitions fail. One study found that companies that created a new, fused brand following a merger or acquisition outperformed market expectations by three percent, while those that proceeded with business as usual or operated under one of the legacy brands significantly underperformed.
A strong new brand, built on a robust foundation of positioning and messaging, can translate the financial strategy into a compelling value proposition, unite the merged companies under one umbrella, and give all key audiences a “reason to believe” in the new entity.
At such a significant inflection point, there’s little room for error. Here are seven core principles for getting your brand strategy for M&A right:
Although research is vital for any branding initiative, when there are two existing companies in play, getting a comprehensive view of the strengths, weaknesses, histories, audiences, cultures, and markets of each respective company is even more important. Not only does it help identify any shared DNA that can be translated into a convincing value proposition for all audiences, but it can also uncover issues or challenges that a new brand can address, such as cultural misalignment, areas of weakness relative to the competition, and changing market dynamics.
Whether it’s a merger of equals, an amicable acquisition, or a hostile takeover, identifying the strengths of both organizations — and making sure the future brand reflects them in a credible and convincing way — is critical. This means not only looking for the strengths that both organizations share, but also those unique to each organization.
Even the strongest financial rationale for a merger will never be enough for a new entity to succeed. It must also be translated to a convincing benefit that all key audiences — customers, prospects, employees, recruits, partners, and more — can get behind.A successful brand should be relevant to all key audiences and also resonate at the individual level. In the B2B space in particular, this often means moving beyond the table-stakes “what’s” and “how’s” of the company’s value proposition and into a much more compelling territory: who it is, what it enables, and why it does what it does. In other words, articulating a higher purpose around which both customers and employees can rally.
Bringing together two disparate companies may mean bringing together two disparate sets of offerings. How will the organizational structure and strategy for these offerings work with the new brand to align with customer expectations? Conducting research into existing brand equity and customer drivers of choice will help determine the right relationship between the new master brand and secondary offering brands. It will also establish an effective nomenclature strategy, and ultimately unlock the value of the combined portfolio of offerings.
According to Harvard Business Review, one of the top reasons mergers fail is unsuccessful cultural integration. A powerful new brand can help bring together different workforces, mindsets, and cultures, uniting employees around a common value proposition and purpose. Brands, and B2B brands in particular, are built from the inside out. This means that transforming your employees into willing and enthusiastic ambassadors of the new brand from the outset will make it that much easier to convince external audiences.
Once you’ve created the platform for the new brand, the work is far from over. A well orchestrated brand launch can set the tone for the merger or acquisition and can be the difference between success and failure. Ensuring that key internal and external audiences understand the new brand and feel involved in and inspired by its debut will help eliminate misperceptions and apathy, creating a strong foundation for the future.
The combination is not the culmination; it’s the commencement. Putting in place the right tools and processes will ensure that a brand sustains itself — and flourishes — well beyond the initial launch period. Initiatives like internal training that encourages employees to “live” the brand, brand councils that facilitate the delivery of a consistent brand experience, and measurement plans that take stock of brand performance will help ensure the health of the new brand and entity over the long-term.
M&A success requires far more than regulatory approval and consolidated books. Equally important is bringing the story of the merger to life for internal and external audiences. In many cases, this can be best achieved with a new brand that represents a fresh slate, a newly formed company that is more than the sum of its parts. Whatever the final acquisition strategy, brand storytelling and activation must be a priority both during and after M&A activity, working frontstage and backstage to win the necessary buy-in from the marketplace, investors and employees.
To learn more about applying these M&A branding principles, contact us.
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