According to Harvard Business Review, the failure rate of mergers and acquisitions ranges from 70–90%. Many factors can contribute to the success or failure of companies being combined. But too often, brand is not championed or leveraged during these critical moments—even though it can provide clarity and inspire invaluable unity across essential stakeholders…
When two companies come together, whether through a merger or an acquisition, they almost invariably rebrand to reflect the combined strengths, value proposition and vision of the new entity. But a merger or acquisition is typically a process that can last months or even a year or more. During this period, a company’s customers will need to be reassured that the merger is on track and, more importantly, that it represents a benefit to them. Employees will have similar concerns: how is the merger progressing and what will it mean for their future? In working with clients undergoing an M&A transaction, we’ve found it very effective to create a brand for the transaction itself. This M&A brand is distinct from the brands of either of the two companies involved in the transaction; it’s a brand created specifically to communicate the purpose and vision behind the transaction itself.
Beyond the Code: The Value of an M&A Brand
An M&A brand should not be confused with the code name that investment banks typically assign to a deal so that the parties involved can remain anonymous. For example, the Pfizer-Allergan merger was code-named Project Phoenix; the Kraft-Unilever merger was known as Project Jedi. These code names typically go away once the deal is announced and there is no longer a need for secrecy. This is where an M&A brand can really add value – when all parties (employees as well as external audiences) are aware of what’s happening, but may not understand the why, when, or how of the deal. Press releases are issued, statements are made, analysts weigh in. But the complexities of mergers generate a lot of noise beyond official communications. An M&A brand can give everyone a concise, memorable framework for making sense of it all.
Using an M&A Brand to Control the Conversation
Is the combination about accelerating growth? Then the brand can telegraph how the combined entities will be able to outperform current expectations for expansion. We created such a brand for two global industrial companies coming together — given the similarities in their product offerings, employees assumed (and feared) that the merger was all about cost cutting (and layoffs). Similarly, customers assumed the merger was done to streamline the product portfolio and find economies of scale (read: less service, higher prices). The growth-oriented M&A brand, with strong supporting messages, was designed to counter these misperceptions.
Does the combination reflect a channel strategy, offering new products and services from one company through the other’s established sales and marketing channels? When a client that provides collaboration software to boards of directors merged with another company that offers different solutions to the same market – corporate boards – we developed an M&A brand focused on value-creating synergies.
Many combinations are done to withstand increasing competition, and sometimes disruption. When two mid-sized professional services firms merged, we developed a “stronger together” merger brand based on strength, scope, and scale.
The M&A Brand: Keep it Conservative
These M&A brands work best when they have a distinct visual identity that can quickly signal that a given communication is about the transaction while reinforcing the overall M&A brand idea. We don’t usually recommend an M&A brand that is too “out there,” as it can take on a life of its own that will get in the way of any future identity that’s developed post-merger. The ideal M&A identity should not take either company too far afield from where it was pre-transaction; rather, it should reflect the goals of the combination in a positive, easy-to-understand manner. Many companies create special websites, usually password protected, to keep relevant parties updated on a transaction; this is where the merger brand often lives most powerfully.
Short-term Life, Long-Term Value
An M&A brand isn’t permanent. Once the transaction is completed (and this can take quite a while) the brand can be phased out. Typically, this is when an entirely new brand takes over, a brand that communicates the long-term value proposition of the new entity. But one of the benefits of developing a merger brand is that the process can yield significant insights into the vision and mission of the new entity. This can result in a powerful head start in creating the new corporate brand, not just in time saved but in insights gathered.
The M&A brand may be temporary, but its impact, as a catalyst for unifying two organizations and maintaining forward momentum during a period of great change and uncertainty, is long lasting.
According to Dealogic, a record $962.6 billion worth of cross-border deals have been announced via 5,498 transactions so far this year. This represents a 38% increase in volume year-on-year ($696.1 billion in 2017 YTD), despite deal activity having dropped 18% over the same period (6,680 deals in 2017…