According to Dealogic, the tech sector is seeing the highest levels of M&A activity since 2000.
The numbers are staggering. Globally, there have been 1,535 tech deals so far in 2016 (as of March 1), reaching $71.4 billion. This is up 53% from last year at the same time. In the U.S. alone deal activity has already surpassed $21 billion. All this after a record-breaking year for global tech M&A in 2015. Not entirely surprising given the critical role that technology continues to play in shaping the world we live and work in.
As is often the case, the discussion surrounding all this activity has focused almost exclusively on the financials. But what happens after the deal? How do newly restructured companies realize their potential?
As brand strategists, we have seen first hand that success often relies on less tangible factors. In particular, the corporate brand – those words and images used to communicate the new story, and value proposition, to the marketplace – can play a critical role in uniting the combined organization and maximizing its value. This is especially true for high-growth tech companies trying to sell complex products and recruit top talent in an increasingly competitive environment.
For marketing executives at newly merged tech companies, the to-do list can be daunting, especially when it comes to brand. To help you cut through the clutter and position the brand for success, we recommend you address these three issues first.
1. Find Your Why
One of the biggest challenges that technology firms will face following a merger is dealing with a growing portfolio that no longer seems to fit into a cohesive story. The companies we work with have often grown through multiple acquisitions or are expanding product portfolios, moving beyond their core story to one that lacks cohesion and that employees and clients can’t articulate.
The common problem in these situations is that that the newly structured company is too focused on the what – the products and solutions it offers – which is holding them back from talking about the why – the higher purpose for why the company exists, its vision and the ultimate impact it wants to have on those it serves.
More broadly, finding a company’s why and identifying how this evolves with acquisitions and growing product portfolios enables the firm to move beyond the nuts and bolts of specific services or products that may seem incongruent or conflicting. Going higher means finding a story that all audiences can connect with and believe in. It gives a company’s own people a rallying cry and story to tell that’s not driven by any one business unit or product, and it’s inspiration that all can get behind.
2. Establish Your What
Companies following a growth-through-acquisition strategy often suffer from a lack of integration between acquired brands and the parent. This is especially true in an industry as product-driven and ever-evolving as technology. The result is a portfolio filled with repetitive, contradictory offerings, logos, and names, creating challenges for sales people and customers alike in understanding what the company does.
Brand architecture, a framework that defines the hierarchy, relationships and differentiation among brands from both sides of the transaction, provides a useful tool for streamlining this integration in support of the business strategy and brand goals. Skipping this step – which requires an understanding of the customer base, competitive landscape and company priorities – can lead to redundancy, inconsistency and confusion inside and outside of the company.
3. Empower Your Who
“Mergers only succeed when they generate synergy and synergy is created only when the employees of the companies are successful at working together.”
– Fast Company
If employees of the newly merged technology company do not feel connected to the new company dynamic, their customers and the market surrounding the business will feel that much more hesitant to accept the merger as a potential success. On the flip side, employees that have a strong bond and clear understanding of the corporate brand can be a company’s most effective communications channel.
Keep this in mind: for employees, a M&A usually means one thing — change. Change can be scary, often met with apprehension and negativity stemming from uncertainty and confusion. To get employees behind the vision for the company and galvanize them into action, you must first appeal to these most basic instincts. This can be achieved by clearly defining what the combination means for them and how it will help them be more successful. Once their minds are at ease and their hearts are in the game, employees will want to connect with the new company and make the changes necessary to ensure the success of the combination.
Start with a Solid Foundation
Marketing executives who have gone through an M&A – in technology, or really any B2B industry – know firsthand that closing the deal is just the first step. Success requires a consistent and compelling brand that empowers the newly combined entity to translate the strong financial and strategic rationale of the transaction into a value proposition for employees and customers.
Implementation can take weeks, months or even years depending on many factors, including the breadth of target markets and complexity of the product portfolio. It takes a lot of effort on everyone’s part – that’s why it’s critical to start with the right brand foundation. Focusing attention on these three fundamental building blocks of the brand will ensure you begin from a place of strength as you move beyond the deal.