In recent years, North American healthcare has been one of the most targeted industries for M&A activity. Reflecting this, the volume of industry mergers, acquisitions and joint ventures has doubled since 2009. There are many drivers of this including the Affordable Care Act (ACA) of 2010 which has had a significant impact on M&A activity, as both health providers and insurers look to these transactions as a means to pursue increased efficiencies and bargaining power. This white paper argues that the role of brand strategy early on, and throughout all five stages of the M&A framework process would help address many of the key target identification, due diligence, integration planning and implementation issues that inevitably occur. At a time of increasing M&A investment in healthcare and resulting intensity of competition, we explore why the brand can be one of an organization’s most important business assets. In fact, the brand’s value is one of the key assets being purchased. Those health systems that ignore or fail to recognize it’s importance to the M&A process may suffer from a number of possible serious consequences.
M&A events require a transformation that is disruptive including as it does: system and technological integration; clinical integration; organizational restructuring; management team changes; combination and rationalization of service line portfolios; reconfiguration of supply chain arrangements; and workforce attrition. With this long and formidable list of areas to cover, it isn’t surprising that post-merger integration benefits are often not realized. The reality is that most organizations may only go through an M&A process once every 10 to 20 years; even the most active companies that are considered to be “serial acquirers” spend an average time of 3.1 years between the end of one acquisition block and the start of the subsequent one. What this means is that organizations that participate in M&A transactions often do not have the internal expertise to lead this scale of integration and brand implementation project. According to the Harvard Business Review, study after study reflects a general failure rate (across all industries) of mergers and acquisitions somewhere between 50 percent and 80 percent. With millions of dollars of cost, and tens of thousands of man hours of internal labor involved, post-merger integration and brand conversion is the definition of “high risk, high reward.”
Once the decision to proceed with an M&A deal is made, we discuss a 2011 ground-breaking study which looked at the three-year post M&A results of three common approaches to M&A branding. The Business-As-Usual approach which maintains both legacy brands; Acquisition where only the stronger brand survives; or Fusion branding which looks to consolidate both brands and leverage the strengths of both. If corporate identity change, or the extension of one surviving brand, is the decision, we finally explore the key, but often neglected role of Brand Implementation which is based on the premise that how you implement the brand is as important as what you implement. Brand Implementation involves the assessment, strategy development, detailed planning and full conversion of a company’s branded assets to the new corporate identity as either part of a corporate rebranding or as the result of a merger or acquisition requirement. Given that the brand implementation always relies on internal personnel, who have knowledge and experience in each area of the organization, the process is not about adding a large team, but instead, establishing a layer of expertise specific to brand integration, to assess, integrate and track the long list of “moving parts” required. Finally, the importance of the internal project organization, communication plans and, of course, employee and other stakeholder engagement are also discussed.
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