M&A – When Brand Matters Most

How to secure transformation success

Today, more than ever before, mergers & acquisitions are brand-driven choices for continuous growth and development of an organization. However, merging or acquiring another brand requires a clear understanding of the forces that come in play when integrating an organization – effectively transforming it into a new reality.

Talking M&A as a transformation agency can be a bit tricky. Just to make it clear, we are not taking on the role of a strategic financial advisory, our colleagues at Brand Finance are excellent at doing just that. We are looking at this subject strictly from an identity and brand-driven perspective.

Acquiring or merging with a new company will force a new set of transformation needs upon you. Undoubtedly, the newly acquired or joint entity will have products, services or solutions, as well as an existing customer base and a brand and communication strategy.

Your Gut Feeling vs Science
When you and your team find yourself in a post-signed M&A situation, it is important not to follow your “gut”, as one often does, but apply a scientific approach to the different scenarios. Surely, the acquisition’s brand could be swallowed as a whole and deleted, or kept exactly as it is. Or there could be a combination of both. Or you could endorse it with your brand. Or even just change the design to become part of the existing brand family. And there are ten other possible options and combinations. You see where this is going.

Over the years of leading simplifying brand architecture projects with large industrial companies the likes of Wilhelmsen ASA and the Kongsberg Group, as well as independent and portfolio-focused companies such as Cloetta or Instabank, we have identified four key dimensions to cross off the list of post mergers & acquisition tactics once the ink has dried.

  1. Define roles, dependencies and ownership
  2. Define the strategic landscape
  3. Decide on the brand architecture
  4. Form and transform the organization

1: Define roles, dependencies and ownership
The steps you should be undertaking involve defining the role of the brand you have merged with / recently acquired – with that, a few questions should be answered:

  • Is your ownership short-term or long-term?
  • Is it a natural or unnatural addition to your portfolio and as such, can it generate (rapid) growth by itself or does it need your support?
  • Is it a strategic ownership to outperform competition and could it operate “hidden” as a flanker brand?
  • Is it a completely new offering, that extends your current services, solutions or products and fits your current offering as an organization and as a a total?
  • Or is it something so new, that you will have to transform your own business to make it fit?
  • Is it in a new region/ country and with that, will new rules and regulations apply (culturally / regulatory)?
  • Will the merger/ acquisition move your company into a new position, and, is that a position you desire?

Based on these strategic questions, one should evaluate the next scenarios based on actual ownership percentage. A joint venture leaves less room for managed transformation compared to a majority ownership. A minority ownership may still leave some room for influence, but you will not be able to push solutions onto your new partner.

2: Define the strategic landscape with a brand & marketing audit
You have to know how the products are sold, how the services and solutions are brought to the customer, and how they are marketed. A combined brand and marketing audit will tell you the exact state of the brand, how it is perceived in the market, and what the internal culture looks like. It provides a factual helicopter view of the current status and what opportunities and challenges the organization, and it’s products are facing mid-merger/acquisition. You may want to add a financial brand equity audit to establish actual brand value – but that is probably already done during the preceding due diligence process.

This audit creates a leadership toolbox that can and should be used to further decisions, decide on directions and eventually, holistic strategies for the brand challenges and opportunities at hand.

You can read a bit more about brand audits right here. In an architecture scenario – you should always add the dimensions of sales and marketing to ascertain actual brand value in the market, as well as how customers actually are exposed to the brand in both a sales and marketing situation.

3: Decide on the architecture and implement design and communication changes
Once you have the knowledge of the strategic landscape and can see the opportunities of a certain architecture, decide on the one most feasible for your endeavours and strategic ambitions. And as always, use any opportunity to:

simplify, simplify, simplify

Your customers will thank you for it.

From there your brand and design guys and gals should address design and communication changes and implement rapidly. Also, any change in brand architecture will demand an organizational transformation, either from the managing party or the acquired one. Daily business, brand management structures, communication and leadership will not be the same after any M&A activities have taken place, which leads us to step four:

4: Form and transform the organization, create a winning culture
Create the new organization. Preferably a liquid, moving, changeable organization. This helps to ensure your ability to change it once the dust has settled, market movements have accepted the change, and your organization has set the pace with the new brand “on board.”

Don’t fool yourself. Merging or acquiring a new brand or a portfolio of brands will demand a change of routines, leadership, and cultures. These changes need to be addressed, preferably in a transparent, proactive and communicative manner. That’s a different project, but don’t take it lightly. Some inspiration in terms of transparent leadership can be found here. Some organizations actually use mergers and acquisitions to review and alter their brand strategy, and with that, their brand platform.

This internal, cultural change may very well be the hardest one to execute. Imagine two sovereign countries merging, or one country taking over the other – all the while in a friendly manner, it will not be likely that e.g. the English suddenly would become French over the first baguette.

Integrating two cultures and belief systems needs to become a different project all together, with top management responsibilities, HR execution power and the relentless creation and support of great brand ambassadors and internal change agents. Eliminate the barrier builders, build on the motivators, and always remember – people do not want change given the choice. At the same time, we all know by now that the seven most expensive words in business today are: “we have always done it that way.”

Mergers & acquisitions and consolidations are parts of everyday business life. Make the investments count. Go from gut to facts and scientific development. Be aware of cultural pitfalls and go for the win.

Want to have a more in-depth talk on the subject? Keen on learning on a few case examples? Well, we are ready, reach out and be in touch!