Mergers and acquisitions are one of the most risky business ventures

They’re a positive minefield. Take a look at the statistics. It is claimed that...

> less than half of the mergers completed during the 80s and 90s ever created real value for shareholders

> the average merger has a 50% chance of reduced productivity and/or profits

> nearly 80% of mergers don’t earn back the costs of the deals themselves

What other business activity would tolerate this lack of success? It amazes me that M&As continue to be so popular. And yet they are. Recessionary trends notwithstanding, they still keep coming. In places like Australia the resources sector has a healthy appetite for them fuelled by the accelerating demand for most things that can be extracted from a land rich in minerals. Shares of listed recruitment firms have been pummelled in recent months as job opportunities start to dry up. Likewise, the volatile equity market and tight credit experienced in recent months have threatened earnings for Australian wealth management firms and brokers. Enter stage left the cashed-up predators.


So what causes M&As to go wrong after the deal is finalised?
Let’s just say that it is a huge challenge to combine two companies, two Boards, two management teams, two brands, two cultures, two sets of employees, two future visions, two IT infrastructures, two sales teams, two marketing departments, two HR teams, two properties, two websites, two intranets, two sets of suppliers, two sets of shareholders... and so it goes on.

The inability to address the integration process is often the No.1 factor in M&A failure. And it’s an expensive one and not only in dollar terms. In the excitement and confusion of the deal-making process where million dollar fees are at stake, the brand often comes a definite second. Yet it is the most valuable asset. When all eyes are on the merger process, the brand’s value must be protected at all costs.

Brand visibility is at an all time high during the merger and can be leveraged through timely communications that influence key audiences when they are most receptive. The brand should be protected and not neglected and put to one side. It makes sense that it is considered before, during and after the deal is finalised.

Neil Cookson is Creative Director at Heywood Innovation.
He gives a presentation entitled ‘Re-branding post merger’ at the IIR Mergers & Acquisitions Strategy 2008 Conference in Sydney on 28 May.

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