Hello there.This is the first of three successive posts that I am publishing in this blog. They explore re-branding issues that tend to occur when competitors merge or are subject to a takeover.
Re-branding when competitors merge
“Melding two established cultures and sets of working practices into one is notoriously difficult. It is no less difficult doing this with two brands”.
There are many articles in the media commiserating over the pitfalls associated with M&A deals and the potential for disaster. M&As are high risk business situations, which make it all the more necessary to engage professional help to guide to manage the integration process and creation of new branding.
When two entities come together the motivations behind the M&A will undoubtedly have a profound effect on the actions of directors and managers.
These actions will in turn have a direct effect on employee, customer and investor engagement with the new entity or brand.
Why would competitors merge? Two entities or brands on the same path might merge:
• to form a bigger entity
• to achieve economies of scale
• to achieve or move towards market dominance
• to remove a problem competitor
• to acquire new skill set(s) or knowledge base
• to extend or complement a product or service range
• to take advantage of geographic dispersal > supply chain > distribution outlet
• to diversify product(s) and/or enter new markets
• to acquire advanced technology or access critical IP
• to ‘own’ a part of the supply chain or distribution
The new brand has to retain or represent no less value than that of the merging brands. The new brand must leverage the assimilated Brand Equity and values and actively support the new entity moving forward.
To achieve this you will need to identify the merging entities’ previous core brand values and determine where they align, where they clash and which to embrace. Brand values are surrounded by emotional attachments. The way you manage these attachments, sensitivities and post-M&A brand objectives will dictate the reaction to, and engagement with, the new brand.
Any post-M&A brand strategy must comprehensively elevate the new brand and engage these four key audiences with it:
1. Employees 2. Customers 3. Shareholders 4. Suppliers
If the M&A is to influence these audiences and gain buy-in, then dedicated pre- and post-M&A brand communications are necessary.
Customers
Key to a successful M&A between competitors is the new entity’s ability to retain or enhance the inherent value of the merging brands throughout this period of change and evolution. Retaining key customer relationships and brand loyalties is fundamental to its financial success.
– Take care to understand the make up of both the merging brands. Look carefully at what can be retained in terms of Brand Equity, market presence, reputation and brand values. Be sure to communicate to your audiences these and any new brand components.
– Launch the new brand. Make it memorable and engaging. Focus on the new brand values. Deliver very quickly and consistently on the new brand promises. Ensure customer-facing employees are engaged with the new brand as soon as possible.
– Engage with both sets of stakeholders pre-M&A to understand the compelling aspects
of both brands and the limits of their loyalty.
Investors
Communication and PR are essential tools to build confidence in the new entity before,
during and after the M&A.
– Is the release of a significant business initiative or innovative product imminent which will consolidate the new entity’s market position irrespective of any branding changes?
– Communicate all the key benefits, advantages, vision and objectives of the M&A to the market.
– Ensure the market is informed of progress and achievements.
Employees
The impact of a M&A is profoundly felt by the employees and suppliers of the merging entities. Certainly it is common for engagement with the M&A to be at its weakest through its employees. Many M&As fail due to negative perceptions from employees who see the way forward purely as a strategy to achieve economies of scale and rationalisation.
Such a strategy is indeed often an integral part of pre-M&A thinking – to look within the new entity for duplication of skillsets, overlap of product ranges and the re-negotiation and rationalisation of supply and distribution chains.
How the M&A is perceived
Unless treated carefully, any aggressive cost cutting and rationalisation can negatively impact on the new brand, particularly if this activity is at odds with the brand’s core values. Timely, open and informative communications must be provided to employees to address any potential negativity, unrest or disillusionment with the M&A.
What is the point of bringing two entities together if the human resources assets walk out the door?
Gen X, Gen Y, and Baby Boomers and the changing employment landscape compound the challenge of brand acceptance – within every organisation there is likely to be a mix. Each group has an entirely different view on change and with their own employment proposition. You need to acknowledge this within employee-specific communications.
Counter uncertainty and fear with strong and compelling employer brand messaging. Inform them of the new brand’s intentions, what it hopes to achieve and the role they play in its success... and more specifically how it will enrich their employment experience. Inspired, motivated and loyal employeesare integral to successful companies.
Retain the key talent, skill and knowledge within the combining entities.
Retain the positive aspects of both cultures – integrate them successfully.
Post M&A brand engagement
Brand is increasingly seen as a key business asset. Defining and developing a compelling re-brand provides the opportunity to present and position the emergent brand values and the future vision.
Click the above diagram to enlarge.Look out for Part 2 of our three part series.
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FREE M&A branding presentation paper
On 28 May 2008 Neil Cookson, Creative Director at Heywood Innovation, gave a presentation at the IIR Mergers & Acquisitions Strategy 2008 Conference in Sydney. The presentation paper ‘Re-branding post M&A’ outlines the key issues, considerations and procedures in post-merger branding.
A FREE copy can be downloaded here.
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