The odds are 1 in 5 that your M&A will succeed! You want to question that?

One important question that tends to be asked by listed companies in a M&A scenario is – “will the M&A enhance shareholder value?” Well, will it? This however is only one of many questions with which you will be faced in the journey to M&A.

Surely this is the primary goal of any listed company? But how is it measured, when many companies are sceptical of measurement methodologies and the integrity and accuracy of the results? It is reasonable to hope that most M&As will result in an instant raising of the company’s share price, and that company boards, rightly or wrongly, will use this simple indicator as a measure of success. But is this rise simply a short term moment of excitement? Surely the long term impact is a more important measure of the potential and ultimate sustainability of the newly formed entity? Will the two sets of shareholders see the upside potential or wallow in confusion as the two brands come together. Harmony or conflict?

Will the new entity gain new market share or even market domination? Will it become the new leader in the market segment? Will your M&A master the science of 1 + 1 = 3 or, as happens in 80% of cases, fail its elementary maths lesson with 1 + 1 = less than 2, or even 1 + 1 = 0 and never graduate from branding university?

Will the post-merger period be a reactive minefield or proactive where synergies are aligned with the pre-merger planning? The path to successful integration requires two approaches – internal and external.

Are the two brands compatible? Will they operate in perfect harmony surrounded by a warm shareholder glow, or fight tooth and nail to protect their interests fuelled by employee and customer concerns? How much brand-related groundwork was commissioned before the M&A was seriously considered?

Internal
Will the newly formed rock band Culture Clash raise its collective voice? Are the two sets of employees compatible? Are they moulded by a strong allegiance to their present employer’s culture and about to feel deceived by the obligation to transition to a totally different or compromise one?

External
What are the marketplace perceptions of the M&A? What exactly have you told your shareholders and customers about all this? Will they believe your predictions of success and compatibility? Have you told them what the new brand model will be – one brand, two brands or new brand – and why?

1. Will you adopt the brand of the acquirer, because it is the market leader and you want to consolidate its position and possibly remove the competition?
2. Will you combine the two brands? Are they equals in regards to similar market presence, reach and brand equity? Or is it simply that you can’t decide which one?
3. Is it preferable to adopt the formula a + b = c where a new combined entity with a new name and identity is born?

How will you fare in the transition? Will your organisational capabilities integrate? Will the employees, resources and brands do likewise?

Time to call in the branding/integration/compatibility coach.


Tony Heywood is a Sydney-based brand guidance counsellor, founder of Heywood Innovation in Sydney Australia with affiliates in Melbourne, Gold Coast, London, Singapore and Mumbai.