When a merger or acquisition happens, it’s not only the two companies that come together: what about the brands? Head of Brand Strategy and Insight, Katie Vickery, outlines what makes a successful M&A from a brand perspective and what considerations you should take when starting out on this exciting (and often daunting) venture.
Companies of all shapes and sizes may experience an M&A at some point and for various reasons, whether that be to secure a greater market share or to establish themselves in a new corner of the market. Whatever the reason, something that will go through any business leader’s mind is this: what will the new company be called and what will the logo look like?
We’ve all witnessed brands that have merged or acquired business with varying degrees of success, but how can it be done well? What should the process be and what factors should be considered along the way?
Of course, a brand is more than a name or a logo, but names in particular hold lots of emotional weight, which is why I will often speak to a client with a degree of seriousness and caution when they mention that they’d like a new brand name – it’s an emotional and difficult path to tread. So when it comes to mergers and acquisitions, it’s no surprise that it’s the name and visual brand that can be a cause of contention between the parties in question. And while a brand holds lots of emotive power, it’s often not something that’s accounted for on a balance sheet.
The starting point should be before you even consider a merger or acquisition as part of your business strategy. A business that understands its purpose – its reason for being and unique proposition – is one that understands what its beliefs are and the types of business that it is willing (or not willing) to get into bed with. Not only can an M&A process impact the culture of a business, but it can also have an impact on your customer perception.
In 2009, Coca-Cola purchased an 18% share in Innocent for a cool £30 million. Over a period of time they increased that share to 58% (for £65million) and again to 90% for an undisclosed sum1. I can only imagine the backlash that this caused on social media. The fear that the big naughty Coca-Cola giant was going to swallow up the playful, quirky Innocent brand and change it forever was a worry for consumers. It just so happens that because of the strength of the Innocent brand – which is one of the reasons for its success up until 2009 – was not only the reason that it was desired by Coca-Cola, but was also the reason that it’s been able to retain its brand essence and has remained true to the brand promise it’s made to the consumer – thankfully those woolly hats haven’t gone anywhere. Coca-Cola saw the value of the Innocent brand and wanted it.
But what about other businesses, and why is the branding of their new ventures so important? With any M&A comes risk. 70-90% of mergers fail to create value for their employees, customers and stakeholders – and inadequate branding processes are often to blame2.
At a practical level, a business needs to provide a clear vision and stake in the ground to your external stakeholders and audiences as to what this new venture is and why it’s important. The worst thing that a business could do is to go through an M&A process and push out mixed or confused messages about who the new business is and its promise out to the market. It should provide a clear, single-minded vision about why the M&A has taken place, how it’s going to address the needs of the market and what it means for its audiences.
So how do you overcome these hurdles and how can you ensure, to the best of your abilities, the success of an M&A from a brand perspective? Here are some points to consider if you’re thinking about embarking on such a journey:
- Use a third party. Don’t even think about trying to do the brand yourself. More than any other situation, you need an impartial, external party who can be the voice of the customer (and the voice of reason) to continuously remind everyone involved in the process of the end goal, and to keep subjectivity out of the process as much as possible
- Consider the impact. Be mindful that the process is going to have impact – and not always for the better. Shaking up a market can unsettle some audiences, so be aware of this from the beginning and ensure that a stakeholder engagement programme is included as part of the scope.
- Engage the team. Without your team on board, this could be a very hard – and potentially disastrous – process. By bringing them on board as early as possible and making them feel like they are part of the journey, it will mean less uncertainty, less pushback later and greater levels of staff engagement in the new brand.
- The cost. It goes without saying that there will be costs involved in the process, besides the actual price of the deal. But try to include an allocation for the brand changes from the beginning, and factor them into the business case for the deal in question.
- The practicalities. Don’t forget to do the practical stuff when deciding on a new brand name – checking Companies House for other businesses and URL availability. So often we see business leaders get excited about a new brand name, quickly followed by heartbreak when it’s not available as a .com URL to purchase for a reasonable price.
- Be proud. Yes, M&A can be an intense and emotional experience, but remember why you’re doing it. Keep your vision in mind and be proud of what you’re achieving through the process. If you can keep up the positivity and momentum, the chances are your stakeholders will feel more positive too and you can hopefully celebrate your joint success together later down the line once the deal is done.
If you’d like to find out more about our brand process and how we might be able to support you during a process of M&A, check out our relevant case studies below, or get in touch with one of our strategists who would love to speak to you about your new venture.
2 Graham Kenny, Don’t Make This Common M&A Mistake: Harvard Business Review, 2020