An organisation’s brand touches its audiences in many ways emotionally and functionally. Years spent building equity in your brand and polishing the promise that it makes can rapidly disintegrate when M&A is in the wind and change scythes through your well laid plans for sector domination.
The really big challenge when undergoing an M&A is to maintain the positive perception of your brand in the hearts and minds of your customers, shareholders, employees, suppliers, analysts and more. Change can be a fickle mistress - stimulating one minute, destructive the next. Merger frenzy inevitably involves much behind-the-scenes deal making activity that distracts leaders and managers from their brand guardianship roles and causes them to neglect relationships with key stakeholders.
Constant communication throughout the M&A process is essential to ensure that stakeholders are kept up to date with developments, are aware of the reasons for the M&A and its potential benefits and risks.
A word of caution...
It is well documented that 20% of mergers fail outright and 78% fail to meet shareholder expectations. With these statistics you could well understand that many companies experience pre-nuptial nerves and harbour some doubts over the long term prospects of the exercise. Yet many plough on regardless driven by the prospect of huge gain.
Merger mistakes to avoid
> Too much focus on the deal and not enough focus on the welfare of the brands in question.
> Inability to understand and cater for people’s reaction to change.
> Acquirers believe that it is only the target brand that will require adjustment.
> Branding assistance only happens after the deal is signed off.
When brand value can account for one third of company book value and almost 10% of a company’s market cap, it makes sense to protect brand value and not underestimate it. Brand value usually has to be identified and optimised in a relatively short space of time - typically 60-90 days between the decision to sell and evaluation by equity firms and acquirers. We work with investment bankers and M&A advisers to implement brand and marketing improvements with the express objective of increasing the company’s value pre-sale.
M&A black hole effect...
If issues are to develop, they will do so in the six months immediately following the merger or acquisition deal is finalised. The usual culprits are market pessimism and resistance to brand realignments, poor communication with investors, confusion over brand loyalties, duplicated workforces, incompatible marketing and sales teams, leadership wrangles, criticism of the merger process and managers - all can easily form a black hole that sucks away the value of both brands.
The damage caused by an M&A failure can be immense and impact across all stakeholders - employees, investors, suppliers and the general public. Reputations can be severely tarnished with greed and mismanagement seen as the root cause.
Best avoid it at all costs by seeking expert help and guidance.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Australia, United Kingdom and India, and joint founder of BrandSynergy in Singapore.
Thursday, March 12, 2009
Thursday, February 19, 2009
M&A DEALS TO RISE IN 2009
When companies struggle in a downturn and their value plummets, it is inevitable that bargain hunters will be there doing their sums. Cashed up companies looking to grow quickly, increase market share or take out the competition are in a holding pattern waiting to pounce. The barriers encountered last year that scuppered mergers and acquisitions – plunging markets, volatility, uncertainty and high valuations – are no more. Change has scythed through these restraints and opened up opportunities rarely encountered in the healthy markets of the last few years.
When there’s M&A activity in the air, which I predict there will be in late 2009 in big numbers, it is inevitable that it will also create uncertainty if not downright panic among employees. We will witness competition among them to be best positioned on the ‘value to the company’ scale for when the crunch comes and change singles out the weakest and the best. Recruiters will receive many enquiries. Promotion plans will be temporarily shelved. The inevitability of duplicated roles will cause restless nights. Mortgages, car repayments and school fees spring to mind. Family holidays move off the radar. Commercial real estate agents venture a call.
The concept that people are crucial to the success of M&As and ultimate brand value has not exactly been respected and managed too well in the last few years. And there are plenty of examples I can quote for you. I believe this will now change in these stressed times, as companies wrestle with the pressing need for greater efficiency and ‘bang for buck’ from expert consultants.
Most employees on average will be subject to two or three mergers or acquisitions in their working lifetime, and as a result will experience the emotional ups and downs of uncertainty, stress, lethargy, extreme camaraderie, isolation and many others. Although the popular press and the more prominent business consultancies will tell you that M&A processes have been cleaned up a lot of late, it has not been my experience, and certainly not at medium-size enterprise level.
There are cases where employees first hear about an M&A affecting their company by reading about it in the press. Timing and open communication therefore are very important.
The much quoted statistics of rampant M&A failure caused by greed and the inability to manage brands can be so easily repeated in this ‘mid-recession era’ we find ourselves in. These statistics will continue however, unless the companies involved and their respective advisers make a more determined effort to understand how brands work and the role they play in M&A success.
Employer brands in particular have been misunderstood and ignored in too many cases. I would like to think that company advisers in particular now recognise the important roles employer branding and communication play and the necessary investment in time, effort and dollars to make it work and help protect the deal and make a better company.
Remember this – people make M&As work and it is people who make better companies.
Who do you want to protect most in an M&A – customers, investors, employees or suppliers?
I’d recommend you start on the inside, because the inside affects everything on the outside. Once you have the inside fixed there’s a much better chance of success with your external audiences.
Human capital risks therefore are the most important... but they can be the most difficult to manage, particularly when emotions are high, when change happens, when retrenchments begin, job roles change and new working conditions are inevitable. Trying to integrate two cultures is one of the hardest jobs and will inevitably lead to natural attrition regardless of how well the process is handled. The more you invest in employer branding, the less likely this will be the case.
If you are faced with organising or managing an imminent M&A, I strongly recommend you read about our employer branding workshops – February in Sydney and March in Singapore.
So where does this leave the branding consultant? It sounds like he/she, apart from being able to advise on M&A corporate branding issues and related communications, has to also be an employer branding consultant. Now I wonder where you can find one of those in the Sydney, Singapore or Mumbai area?
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Australia, United Kingdom and India, and joint founder of BrandSynergy in Singapore.
When there’s M&A activity in the air, which I predict there will be in late 2009 in big numbers, it is inevitable that it will also create uncertainty if not downright panic among employees. We will witness competition among them to be best positioned on the ‘value to the company’ scale for when the crunch comes and change singles out the weakest and the best. Recruiters will receive many enquiries. Promotion plans will be temporarily shelved. The inevitability of duplicated roles will cause restless nights. Mortgages, car repayments and school fees spring to mind. Family holidays move off the radar. Commercial real estate agents venture a call.
The concept that people are crucial to the success of M&As and ultimate brand value has not exactly been respected and managed too well in the last few years. And there are plenty of examples I can quote for you. I believe this will now change in these stressed times, as companies wrestle with the pressing need for greater efficiency and ‘bang for buck’ from expert consultants.
Most employees on average will be subject to two or three mergers or acquisitions in their working lifetime, and as a result will experience the emotional ups and downs of uncertainty, stress, lethargy, extreme camaraderie, isolation and many others. Although the popular press and the more prominent business consultancies will tell you that M&A processes have been cleaned up a lot of late, it has not been my experience, and certainly not at medium-size enterprise level.
There are cases where employees first hear about an M&A affecting their company by reading about it in the press. Timing and open communication therefore are very important.
The much quoted statistics of rampant M&A failure caused by greed and the inability to manage brands can be so easily repeated in this ‘mid-recession era’ we find ourselves in. These statistics will continue however, unless the companies involved and their respective advisers make a more determined effort to understand how brands work and the role they play in M&A success.
Employer brands in particular have been misunderstood and ignored in too many cases. I would like to think that company advisers in particular now recognise the important roles employer branding and communication play and the necessary investment in time, effort and dollars to make it work and help protect the deal and make a better company.
Remember this – people make M&As work and it is people who make better companies.
Who do you want to protect most in an M&A – customers, investors, employees or suppliers?
I’d recommend you start on the inside, because the inside affects everything on the outside. Once you have the inside fixed there’s a much better chance of success with your external audiences.
Human capital risks therefore are the most important... but they can be the most difficult to manage, particularly when emotions are high, when change happens, when retrenchments begin, job roles change and new working conditions are inevitable. Trying to integrate two cultures is one of the hardest jobs and will inevitably lead to natural attrition regardless of how well the process is handled. The more you invest in employer branding, the less likely this will be the case.
If you are faced with organising or managing an imminent M&A, I strongly recommend you read about our employer branding workshops – February in Sydney and March in Singapore.
So where does this leave the branding consultant? It sounds like he/she, apart from being able to advise on M&A corporate branding issues and related communications, has to also be an employer branding consultant. Now I wonder where you can find one of those in the Sydney, Singapore or Mumbai area?
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Australia, United Kingdom and India, and joint founder of BrandSynergy in Singapore.
Tuesday, January 20, 2009
Predators on the prowl – protect your brand
Presently there are many companies out there of all shapes and sizes suffering from the collapse in financial markets. Some are hanging on a slim thread, conscious of the predators lurking below. These cash-rich predators realise that the companies are worth considerably less than they were a year ago, and may be worth considerably more when markets start to recover later this year. They may want to make a quick buck from on-selling when the time is right. The targets may have something valuable that is strategically important and attractive. Some may be stripped of valuable assets and then cast aside. The reasons for acquisition are manifold.
The extent and severity with which the financial collapse has affected companies now suggests that a considerable increase in company mergers and acquisitions will happen in 2009 before the markets recover. Does this suggest most activity will happen in the first half? I wonder. Those companies who were a target in 2008 while in good health and valued accordingly, are now looking over their shoulders fearing the inevitable. Some will come willingly, while some will plan for a lengthy siege, holding out for every dollar.
One factor may not change and that is the horrendous lack of merger success in Australia, with 80% often quoted as failing to recover their merger costs – one of the worst failure rates of any business activity. High level casualties such as Tata’s 2008 acquisition of Jaguar and Land Rover from Ford for $2.3 billion, being around half the figure that Ford paid several years previously, indicate the damage that can be inflicted on brands and, in this case, the tough job Tata has to restore a huge amount of brand value.
Mergers face significant risks and challenges – deciding which brand to retain, defining that brand, integrating the businesses, rationalising the brand architecture, engaging and retaining employees and realising cost savings and synergies while creating future value that is greater than the sum of the merged parts.
Branding can contribute significantly to the success of a merger yet it rarely receives the attention it deserves. It can however become a complex and tricky situation to handle when post-merger reality hits, particularly when CEOs become obstinate and hold on to what is dear to them and resist the need to change. Of course a lot depends on whether it is a friendly acquisition or hostile takeover.
In order to steer a clear course for the new entity, CEOs and senior management must be clear on the new entity’s vision and commitment to the future, not only for the company but for all remaining staff. Rationale for brand changes must be clearly and persuasively delivered. All management and staff from the CEO down must be prepared for change. Allegiance to the retiring brand must be carefully transferred to the surviving brand. The branding exercise must be accomplished with some speed and purpose to achieve momentum and agreed integration milestones.
The vision must be encapsulated in a clear statement of brand purpose. It must identify the essential points of differentiation and their relevance to key audiences.The brand should unify employees and be a rallying cry. It must signal strength to investors and bring reassurance to customers.
Companies rarely achieve effective M&A branding without professional help. Utilising internal resources inevitably hits a brick wall when conflicting allegiances rise to the fore. With a branding consultant as an independent partner to help guide and steer companies through the merger branding process, there is significant opportunity to avoid falling into the 80% trap. These partners must be truly aligned with the businesses involved – with the decision makers and with their objectives, plans, and people – in order to manage change effectively.
It is imperative that the branding consultancy process commences before the M&A deal is completed in order to determine what each company brings to the fore and what can be used for the future.
One of the biggest questions asked in M&A scenarios is “Are the customers a more important consideration than the employees?” While initially customers would appear to be of prime concern, I recommend that employees come first. Always start on the inside first. The company may be able to withstand losing a few customers but losing a few key employees can have a devastating impact.
M&As are expensive undertakings. For many, expenses inevitably run into the millions of dollars. It would seem to make a lot of sense to at least meet with an M&A branding expert before things go too far and listen to some good sense. A few thousand dollars invested now may well save millions later, and keep you away from the 80%.
Tony Heywood is an international branding consultant and founder of Heywood Innovation in Sydney and co-founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
The extent and severity with which the financial collapse has affected companies now suggests that a considerable increase in company mergers and acquisitions will happen in 2009 before the markets recover. Does this suggest most activity will happen in the first half? I wonder. Those companies who were a target in 2008 while in good health and valued accordingly, are now looking over their shoulders fearing the inevitable. Some will come willingly, while some will plan for a lengthy siege, holding out for every dollar.
One factor may not change and that is the horrendous lack of merger success in Australia, with 80% often quoted as failing to recover their merger costs – one of the worst failure rates of any business activity. High level casualties such as Tata’s 2008 acquisition of Jaguar and Land Rover from Ford for $2.3 billion, being around half the figure that Ford paid several years previously, indicate the damage that can be inflicted on brands and, in this case, the tough job Tata has to restore a huge amount of brand value.
Mergers face significant risks and challenges – deciding which brand to retain, defining that brand, integrating the businesses, rationalising the brand architecture, engaging and retaining employees and realising cost savings and synergies while creating future value that is greater than the sum of the merged parts.
Branding can contribute significantly to the success of a merger yet it rarely receives the attention it deserves. It can however become a complex and tricky situation to handle when post-merger reality hits, particularly when CEOs become obstinate and hold on to what is dear to them and resist the need to change. Of course a lot depends on whether it is a friendly acquisition or hostile takeover.
In order to steer a clear course for the new entity, CEOs and senior management must be clear on the new entity’s vision and commitment to the future, not only for the company but for all remaining staff. Rationale for brand changes must be clearly and persuasively delivered. All management and staff from the CEO down must be prepared for change. Allegiance to the retiring brand must be carefully transferred to the surviving brand. The branding exercise must be accomplished with some speed and purpose to achieve momentum and agreed integration milestones.
The vision must be encapsulated in a clear statement of brand purpose. It must identify the essential points of differentiation and their relevance to key audiences.The brand should unify employees and be a rallying cry. It must signal strength to investors and bring reassurance to customers.
Companies rarely achieve effective M&A branding without professional help. Utilising internal resources inevitably hits a brick wall when conflicting allegiances rise to the fore. With a branding consultant as an independent partner to help guide and steer companies through the merger branding process, there is significant opportunity to avoid falling into the 80% trap. These partners must be truly aligned with the businesses involved – with the decision makers and with their objectives, plans, and people – in order to manage change effectively.
It is imperative that the branding consultancy process commences before the M&A deal is completed in order to determine what each company brings to the fore and what can be used for the future.
One of the biggest questions asked in M&A scenarios is “Are the customers a more important consideration than the employees?” While initially customers would appear to be of prime concern, I recommend that employees come first. Always start on the inside first. The company may be able to withstand losing a few customers but losing a few key employees can have a devastating impact.
M&As are expensive undertakings. For many, expenses inevitably run into the millions of dollars. It would seem to make a lot of sense to at least meet with an M&A branding expert before things go too far and listen to some good sense. A few thousand dollars invested now may well save millions later, and keep you away from the 80%.
Tony Heywood is an international branding consultant and founder of Heywood Innovation in Sydney and co-founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
Thursday, December 18, 2008
Mergers come out of the closet
In the heady days of cheap and plentiful finance and relaxed governance, before the US-driven collapse of financial markets set in, there were a considerable number of companies looking to float, raise capital and merge.
Where did they all go? As you would expect, when reality hit the fan many of these thought twice about such brave moves, and hid their plans in the back of a deep cupboard drawer labelled ‘Field of Dreams (pending)’.
The thought of floating, falling from grace and bearing the collective brunt of the investor agitatus species did not appeal. Remember that this is a species that, once deprived of its staple dividend feed, is characteristically known for its long term memory capacity, piercing stare and sharp tongue.
Failed capital raisings are less of a risk in the long term damage stakes, incurring only temporary embarassment when the money doesn’t appear in the amounts hoped for, but which may extend to demotion or removal from the Board depending on the level of shareholder angst.
Mergers are a little bit different. In the good times, having done the sums and the long hours in the boardroom and on the golf course, merger plans were hatched and the adrenalin flowed at the prospect of growth, enhanced positioning and market domination, where all competitors were freely offered a reversed Churchillian salute.
That was then. A new reality has now set in. So what happened to all those brave merger plans and brave captains of industry? Well, some plans were shelved but plenty remain in a holding pattern waiting for the financial barometer to shift from CHANGE to FAIR before they once again prepare for take off fuelled by renewed vigour, determination and a modicum of greed.
Many targets remain targets. Some are even more of a target now. Unwilling targets may now be less so, as their value plummets. With a lower price tag they may look even more attractive. Bargain basement opportunities may look too risky depending on the industry sector in which they reside.
All good stuff this, but what does it all mean? It means that once the barometer does shift and media barons raise their thumb in symbolic gesture sometime later in 2009, it will be safe to once more venture out into the sunlight beyond the dark shadows cast by the pillars of the Big Four and timely to buy back the Porsche and worship the Big Deal once more.
Branding consultants like myself will, with renewed enthusiasm, rattle cages and preach the gospel on good brand sense and the important contribution it makes to merger success. Will the deal makers listen? This is the question. In 2009 I think they will, because people learn from mistakes don’t they?
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
Where did they all go? As you would expect, when reality hit the fan many of these thought twice about such brave moves, and hid their plans in the back of a deep cupboard drawer labelled ‘Field of Dreams (pending)’.
The thought of floating, falling from grace and bearing the collective brunt of the investor agitatus species did not appeal. Remember that this is a species that, once deprived of its staple dividend feed, is characteristically known for its long term memory capacity, piercing stare and sharp tongue.
Failed capital raisings are less of a risk in the long term damage stakes, incurring only temporary embarassment when the money doesn’t appear in the amounts hoped for, but which may extend to demotion or removal from the Board depending on the level of shareholder angst.
Mergers are a little bit different. In the good times, having done the sums and the long hours in the boardroom and on the golf course, merger plans were hatched and the adrenalin flowed at the prospect of growth, enhanced positioning and market domination, where all competitors were freely offered a reversed Churchillian salute.
That was then. A new reality has now set in. So what happened to all those brave merger plans and brave captains of industry? Well, some plans were shelved but plenty remain in a holding pattern waiting for the financial barometer to shift from CHANGE to FAIR before they once again prepare for take off fuelled by renewed vigour, determination and a modicum of greed.
Many targets remain targets. Some are even more of a target now. Unwilling targets may now be less so, as their value plummets. With a lower price tag they may look even more attractive. Bargain basement opportunities may look too risky depending on the industry sector in which they reside.
All good stuff this, but what does it all mean? It means that once the barometer does shift and media barons raise their thumb in symbolic gesture sometime later in 2009, it will be safe to once more venture out into the sunlight beyond the dark shadows cast by the pillars of the Big Four and timely to buy back the Porsche and worship the Big Deal once more.
Branding consultants like myself will, with renewed enthusiasm, rattle cages and preach the gospel on good brand sense and the important contribution it makes to merger success. Will the deal makers listen? This is the question. In 2009 I think they will, because people learn from mistakes don’t they?
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
Sunday, November 9, 2008
M&A in a ‘holding pattern’? Now is the time to get your head around the branding implications.
As a result of the global downturn, a considerable number of planned M&As have been put into a ‘formation holding pattern’ pending market recovery. Some have since been permanently shelved, but many are still out there cowering below decks with the hatches battened down, waiting for calmer waters and the chance to fly the flag and sail forth.
While the timing to resurrect interest in M&A deals is at present very much a crystal ball gazing exercise, potential merger partners would do well to take the time to focus on the frequently ignored branding requirements of the merger. After all, your M&A is all about creating future value for the merged entity – value that is greater than that of the merging parties combined – value that is very dependent on your brand’s strength and ability to adapt to change. Yet it is taking decades of miserable M&A performance for the penny to drop and corporate motivation to be balanced with brand motivation.
The lack of success in M&A deals is staggering – McKinsey and Company state that 80% of mergers fail to earn back the cost of the deals. Where else in business would such low performance be tolerated? Arrogance and emotions are contributing factors to the failures, difficulties in agreeing on a name to take the new entity forward and concerns from employees on the viability and longevity of the ‘deal’. It is understandable that company owners can be highly protective of their prized possession which diverts them from making sensible and objective decisions.
The surviving name is a critically important consideration, particularly to satisfy investors, business partners, regulators, clients, employees and suppliers – a not insubstantial and critical audience! There are many other considerations that relate to the brand. How do you ensure that you don’t rock the client boat and lose their confidence? How do you communicate solid rationale for your decision not only for the name but for the way you intend to navigate the brand forward? What’s the new vision? How are you going to handle two sets of values, two sets of customers and two sets of employees? How are you keeping customers and employees informed while the process unfolds? What if the brand architecture needs to be modified or rationalised, particularly where there are complex group structures and subsidiary businesses, particularly where they reside in more than one country?
Our experience at Heywood Innovation is that employee disengagement can easily cause the merger to founder. Inadequate communication on merger rationale and progress, absent leadership, lack of focus and vision for a brave new future, and inconclusive discussion and agreement on new goals can all conspire to reduce the deal’s potential for success.
The CEO and management team must be highly visible as the champions of the new brand before, during and after the deal is cemented. The brand should be portrayed as a symbol of unity and an opportunity for employees, a reaffirmation of market strength for investors and an emotional re-charge for customers.
The fact that many M&As have been put on hold will only serve to dilute confidence. When markets recover, the decision to press ahead must be accomplished with great conviction and confidence. Now is your chance to give serious consideration to the branding implications before the storm subsides, money starts to flow and M&As once again become the flavour of the month.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
While the timing to resurrect interest in M&A deals is at present very much a crystal ball gazing exercise, potential merger partners would do well to take the time to focus on the frequently ignored branding requirements of the merger. After all, your M&A is all about creating future value for the merged entity – value that is greater than that of the merging parties combined – value that is very dependent on your brand’s strength and ability to adapt to change. Yet it is taking decades of miserable M&A performance for the penny to drop and corporate motivation to be balanced with brand motivation.
The lack of success in M&A deals is staggering – McKinsey and Company state that 80% of mergers fail to earn back the cost of the deals. Where else in business would such low performance be tolerated? Arrogance and emotions are contributing factors to the failures, difficulties in agreeing on a name to take the new entity forward and concerns from employees on the viability and longevity of the ‘deal’. It is understandable that company owners can be highly protective of their prized possession which diverts them from making sensible and objective decisions.
The surviving name is a critically important consideration, particularly to satisfy investors, business partners, regulators, clients, employees and suppliers – a not insubstantial and critical audience! There are many other considerations that relate to the brand. How do you ensure that you don’t rock the client boat and lose their confidence? How do you communicate solid rationale for your decision not only for the name but for the way you intend to navigate the brand forward? What’s the new vision? How are you going to handle two sets of values, two sets of customers and two sets of employees? How are you keeping customers and employees informed while the process unfolds? What if the brand architecture needs to be modified or rationalised, particularly where there are complex group structures and subsidiary businesses, particularly where they reside in more than one country?
Our experience at Heywood Innovation is that employee disengagement can easily cause the merger to founder. Inadequate communication on merger rationale and progress, absent leadership, lack of focus and vision for a brave new future, and inconclusive discussion and agreement on new goals can all conspire to reduce the deal’s potential for success.
The CEO and management team must be highly visible as the champions of the new brand before, during and after the deal is cemented. The brand should be portrayed as a symbol of unity and an opportunity for employees, a reaffirmation of market strength for investors and an emotional re-charge for customers.
The fact that many M&As have been put on hold will only serve to dilute confidence. When markets recover, the decision to press ahead must be accomplished with great conviction and confidence. Now is your chance to give serious consideration to the branding implications before the storm subsides, money starts to flow and M&As once again become the flavour of the month.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
Tuesday, September 30, 2008
Post M&A Branding – Part 3 of 3 posts
Deciding which brand to absorb in the M&A
To get the M&A deal across the line requires significant investment. Attention then turns to rationalisation and new cost efficiencies. What rarely happens in these post-M&A stages is pro-active investment in a branding and communication strategy.
To harness the new brand’s full potential you need to engage an integrated branding and communication methodology which justifies and promotes the new brand.
To optimise the chances of success and to minimise risk, the brand methodology must encompass the key components of:
Discovery
Future vision
Name generation
Definition
Expression
Communications
Delivery
Engagement
Monitoring
There are four strategic sets of communications to consider:
1. External and product brand communications
2. Shareholder communications
3. Employment branding and employee communications
4. Internal brand engagement and change management communications
Must do branding activities pre-and post-M&A
1. Appoint competent brand professionals pre-M&A. Build an ongoing relationship with them and be receptive to their recommendations.
2. Consider branding, internal communications and marketing as essential to the success of the M&A process.
3. Allocate a realistic budget specific to the branding activities.
4. Commission ‘Brand Discovery’ research and gain input from:
CEO
Board members
Managers
Key employee groups
Shareholders
Customers
Suppliers
5. Communicate with key audiences before, during and after the M&A.
6. Ensure retained service/product brands are consistent with the parent brand.
7. Determine how to select the most appropriate brand with which to move forward – Survivor, Combo, Evolver or Co-existing and who will be involved in the selection/decision process.
8. Develop a comprehensive employer branding program.
9. Research, define and communicate your unique brand proposition – understand it and believe in it.
10. Communicate to employees, investors and customers the strategic reasons behind the re-brand and what it comprises – this will foster acceptance and buy-in.
11. Establish a branding committee to oversee the development and implementation of the brand as well as brand champions to ensure it achieves its objectives.
12. Agree on an implementation schedule. Measure message and brand penetration and awareness at pre-appointed milestones – give it time.
Conclusion
Employ proven methodologies to determine the most appropriate brand model and allow branding professionals to play their part in helping to determine, communicate and embed the new brand. They will help determine – where it was, where it now is, where it needs to be and how best to get it there.
Remember in the post-M&A landscape that people are core – employee sentiment, investor confidence and customer engagement and loyalty are key factors controlling the success of the M&A. Effective branding and communications will influence and satisfy these audiences and gain their confidence and buy-in.
Managing the brand architecture of merging entities is a complex task. The need for effective brand management increases with the complexity of the M&A and number of brands and sub-brands being brought together.
Engage with a branding and communications process managed by branding professionals.Consider the branding program as an extension of the M&A investment and allocate appropriate resources at an early stage in the process.
If your organisation is at the point of considering a merger or acquisition in Australia, Singapore or the United Kingdom and you need guidance, feel free to contact me tony@heywood.com.au
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
To get the M&A deal across the line requires significant investment. Attention then turns to rationalisation and new cost efficiencies. What rarely happens in these post-M&A stages is pro-active investment in a branding and communication strategy.
To harness the new brand’s full potential you need to engage an integrated branding and communication methodology which justifies and promotes the new brand.
To optimise the chances of success and to minimise risk, the brand methodology must encompass the key components of:
Discovery
Future vision
Name generation
Definition
Expression
Communications
Delivery
Engagement
Monitoring
There are four strategic sets of communications to consider:
1. External and product brand communications
2. Shareholder communications
3. Employment branding and employee communications
4. Internal brand engagement and change management communications
Must do branding activities pre-and post-M&A
1. Appoint competent brand professionals pre-M&A. Build an ongoing relationship with them and be receptive to their recommendations.
2. Consider branding, internal communications and marketing as essential to the success of the M&A process.
3. Allocate a realistic budget specific to the branding activities.
4. Commission ‘Brand Discovery’ research and gain input from:
CEO
Board members
Managers
Key employee groups
Shareholders
Customers
Suppliers
5. Communicate with key audiences before, during and after the M&A.
6. Ensure retained service/product brands are consistent with the parent brand.
7. Determine how to select the most appropriate brand with which to move forward – Survivor, Combo, Evolver or Co-existing and who will be involved in the selection/decision process.
8. Develop a comprehensive employer branding program.
9. Research, define and communicate your unique brand proposition – understand it and believe in it.
10. Communicate to employees, investors and customers the strategic reasons behind the re-brand and what it comprises – this will foster acceptance and buy-in.
11. Establish a branding committee to oversee the development and implementation of the brand as well as brand champions to ensure it achieves its objectives.
12. Agree on an implementation schedule. Measure message and brand penetration and awareness at pre-appointed milestones – give it time.
Conclusion
Employ proven methodologies to determine the most appropriate brand model and allow branding professionals to play their part in helping to determine, communicate and embed the new brand. They will help determine – where it was, where it now is, where it needs to be and how best to get it there.
Remember in the post-M&A landscape that people are core – employee sentiment, investor confidence and customer engagement and loyalty are key factors controlling the success of the M&A. Effective branding and communications will influence and satisfy these audiences and gain their confidence and buy-in.
Managing the brand architecture of merging entities is a complex task. The need for effective brand management increases with the complexity of the M&A and number of brands and sub-brands being brought together.
Engage with a branding and communications process managed by branding professionals.Consider the branding program as an extension of the M&A investment and allocate appropriate resources at an early stage in the process.
If your organisation is at the point of considering a merger or acquisition in Australia, Singapore or the United Kingdom and you need guidance, feel free to contact me tony@heywood.com.au
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
Sunday, September 7, 2008
Merger or Acquisition... that is the question
The more astute companies, or those that are miraculously untouched by the global economic turmoil that we are presently experiencing, will have their minds set on growth. For many companies this is a necessity to ensure that competitors do not get the upper hand and that shareholder confidence is maintained.
The more aggressive and impatient management teams of this world tend to favour the acquisition of complementary businesses over the often slow path to growth.
What looks good on paper in accountants’ terms however, may well not look too rosy when it comes to choosing to keep one brand or the other, or create an entirely new one. This difficult choice, feared by many leaders, is inevitably left until the last moment, instead of being considered an essential component of the main battle plan.
The great danger is that devaluing the importance of the brand before, during and after the process may result in weakening two brands instead of fortifying one. Stakeholders can easily be alienated if future vision and strategy are not present. Of concern is the prospect that the two sets of customers may not embrace the perceived benefits of the combined entity and view it and its leaders with suspicion.
In order to leverage maximum benefits from the ‘deal’ for the benefit of both organisations, I recommend that as a first step several simple and relevant questions are asked by brand managers prior to the ‘deal’ to solicit responses from key players and help bring clarity and perspective to the situation.
Brands can merge in a number of ways. Which is the right one for you?
There are three main options to consider.
1/. The creation of a single ‘monolithic’ brand. This can be your present one, that of the other organisation or a completely new one that represents the combined strengths of both parties. Example: BMW.
2/. A brand that combines the names of the merged entities. Example: GlaxoSmithKline.
3/. A ‘house of brands’ where the house brands exist in their own right with no noticeable connection to the parent brand Example: Tata and its Jaguar and Land-Rover brands
In order to choose the most appropriate solution for your particular situation, you are well advised to seek the guidance of an external branding expert such as Heywood Innovation. A strong business case must be prepared with bulletproof rationale to minimise the risk of a potentially catastrophic wrong decision.
Will the merged brand be able to position itself favourably?
The aspired positioning of the new entity may well be different to that of the two merging entities. To make this shift it is necessary to determine exactly where the brands sit in the hearts and minds of both stakeholder sets – customers, employees, future job candidates, suppliers, analysts and the general public. The competence, frequency and methods by which both entities communicate with their respective stakeholders must be analysed. The gaps between the two must be measured and also the gaps between the perception of the brands internally and externally. The findings will form the basis of a strategy to differentiate the new entity and position it favourably with key audiences.
What will customers think of the merged entity?
The last thing you want to happen as a result of the merger is to lose the confidence and loyalty of customers from both entities. It makes sense that comprehesive profiling of both sets of customers is undertaken to gain a comprehensive understanding of the reasons why they became customers and why they remain so.
The methodologies that cultivate, nurture and retain customers must be compared and adjusted to suit the new entity. This will involve qualitative research and one-on-one interviews with cross sections of both customer groups. The results of this exercise will determine the optimum solution to calm customer fears, satisfy their need for information, clarify the benefits and reinforce their confidence.
How can the heritage of both parties be leveraged?
The merger activities will add a new chapter to the history of the two merging entities. It is essential that the positive aspects of this heritage are considered, and retained where necessary, to ensure their importance to customer loyalty is not lost or diminished. Heritage can positively influence customer buying decisions. Respect past histories while planning for a brave new future.
How will employees respond to the merger?
Mergers tend to be viewed initially by employees in a more negative light than a positive one. The prospect of working with new and different people, potential duplication of positions leading to retrenchments, new performance goals, new managers, new location... all come to mind before thoughts of new opportunities, potential for advancement, more job satisfaction, more pay etc.
To overcome this demands early involvement in discussions with employees before, during and after the merger process. The need for active communication with them will be at an all time high – the competency of which will contribute considerably to the success of the merger. Benefits to them, to the organisation and to shareholders must be high on the agenda.
The ultimate goal is to have employees act as brand ambassadors, to see the value in the merger and the prospect of a brighter future.
Will a new ‘look and feel’ rock the customer boat?
Customers can be very fickle creatures. They get comfortable with organisations and products they choose and on which they come to rely. Any indication of change is likely to prompt them to re-appraise the time-honoured relationship they have with you. The most obvious triggers are the news of a merger, or a change of name or logo. The visual aspects of a brand are what people tend to recall most succinctly – name, logo, symbols, images and colors. The McDonalds golden arch, the Nike ‘swoosh’ and Apple’s apple are prime examples. Changes to an organisation’s logo can cause once loyal customers to ridicule the organisation, particularly when the media get their hands on a ‘good story’ and ridicule the expense and designer rationale. The BHP Billiton ‘blobs’, the Commonwealth Bank Sao cracker and Vegemite and, in the UK, BT’s ‘prancing pervert’ are indelibly etched in the respective companies’ minds.
It is a foolhardy organisation that fails to respect the relationship customers have with these visual components of the brand. It suggests that the more evolutionary the change, the more chance you have of maintaining customer loyalty. Remember that any changes must be backed up by bulletproof rationale.
Organisations need to undertsand that it takes a qualified and experienced branding expert to navigate a safe passage for the brand(s) through the merger process and to gain support from its internal and external stakeholders.
If your organisation is at the point of considering a merger or acquisition in Australia, Singapore or the United Kingdom and you need guidance, feel free to contact me tony@heywood.com.au
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
The more aggressive and impatient management teams of this world tend to favour the acquisition of complementary businesses over the often slow path to growth.
What looks good on paper in accountants’ terms however, may well not look too rosy when it comes to choosing to keep one brand or the other, or create an entirely new one. This difficult choice, feared by many leaders, is inevitably left until the last moment, instead of being considered an essential component of the main battle plan.
The great danger is that devaluing the importance of the brand before, during and after the process may result in weakening two brands instead of fortifying one. Stakeholders can easily be alienated if future vision and strategy are not present. Of concern is the prospect that the two sets of customers may not embrace the perceived benefits of the combined entity and view it and its leaders with suspicion.
In order to leverage maximum benefits from the ‘deal’ for the benefit of both organisations, I recommend that as a first step several simple and relevant questions are asked by brand managers prior to the ‘deal’ to solicit responses from key players and help bring clarity and perspective to the situation.
Brands can merge in a number of ways. Which is the right one for you?
There are three main options to consider.
1/. The creation of a single ‘monolithic’ brand. This can be your present one, that of the other organisation or a completely new one that represents the combined strengths of both parties. Example: BMW.
2/. A brand that combines the names of the merged entities. Example: GlaxoSmithKline.
3/. A ‘house of brands’ where the house brands exist in their own right with no noticeable connection to the parent brand Example: Tata and its Jaguar and Land-Rover brands
In order to choose the most appropriate solution for your particular situation, you are well advised to seek the guidance of an external branding expert such as Heywood Innovation. A strong business case must be prepared with bulletproof rationale to minimise the risk of a potentially catastrophic wrong decision.
Will the merged brand be able to position itself favourably?
The aspired positioning of the new entity may well be different to that of the two merging entities. To make this shift it is necessary to determine exactly where the brands sit in the hearts and minds of both stakeholder sets – customers, employees, future job candidates, suppliers, analysts and the general public. The competence, frequency and methods by which both entities communicate with their respective stakeholders must be analysed. The gaps between the two must be measured and also the gaps between the perception of the brands internally and externally. The findings will form the basis of a strategy to differentiate the new entity and position it favourably with key audiences.
What will customers think of the merged entity?
The last thing you want to happen as a result of the merger is to lose the confidence and loyalty of customers from both entities. It makes sense that comprehesive profiling of both sets of customers is undertaken to gain a comprehensive understanding of the reasons why they became customers and why they remain so.
The methodologies that cultivate, nurture and retain customers must be compared and adjusted to suit the new entity. This will involve qualitative research and one-on-one interviews with cross sections of both customer groups. The results of this exercise will determine the optimum solution to calm customer fears, satisfy their need for information, clarify the benefits and reinforce their confidence.
How can the heritage of both parties be leveraged?
The merger activities will add a new chapter to the history of the two merging entities. It is essential that the positive aspects of this heritage are considered, and retained where necessary, to ensure their importance to customer loyalty is not lost or diminished. Heritage can positively influence customer buying decisions. Respect past histories while planning for a brave new future.
How will employees respond to the merger?
Mergers tend to be viewed initially by employees in a more negative light than a positive one. The prospect of working with new and different people, potential duplication of positions leading to retrenchments, new performance goals, new managers, new location... all come to mind before thoughts of new opportunities, potential for advancement, more job satisfaction, more pay etc.
To overcome this demands early involvement in discussions with employees before, during and after the merger process. The need for active communication with them will be at an all time high – the competency of which will contribute considerably to the success of the merger. Benefits to them, to the organisation and to shareholders must be high on the agenda.
The ultimate goal is to have employees act as brand ambassadors, to see the value in the merger and the prospect of a brighter future.
Will a new ‘look and feel’ rock the customer boat?
Customers can be very fickle creatures. They get comfortable with organisations and products they choose and on which they come to rely. Any indication of change is likely to prompt them to re-appraise the time-honoured relationship they have with you. The most obvious triggers are the news of a merger, or a change of name or logo. The visual aspects of a brand are what people tend to recall most succinctly – name, logo, symbols, images and colors. The McDonalds golden arch, the Nike ‘swoosh’ and Apple’s apple are prime examples. Changes to an organisation’s logo can cause once loyal customers to ridicule the organisation, particularly when the media get their hands on a ‘good story’ and ridicule the expense and designer rationale. The BHP Billiton ‘blobs’, the Commonwealth Bank Sao cracker and Vegemite and, in the UK, BT’s ‘prancing pervert’ are indelibly etched in the respective companies’ minds.
It is a foolhardy organisation that fails to respect the relationship customers have with these visual components of the brand. It suggests that the more evolutionary the change, the more chance you have of maintaining customer loyalty. Remember that any changes must be backed up by bulletproof rationale.
Organisations need to undertsand that it takes a qualified and experienced branding expert to navigate a safe passage for the brand(s) through the merger process and to gain support from its internal and external stakeholders.
If your organisation is at the point of considering a merger or acquisition in Australia, Singapore or the United Kingdom and you need guidance, feel free to contact me tony@heywood.com.au
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work at www.heywood.com.au
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