During the past twenty years, the global trend of mergers and acquisitions has been steadily increasing, with both the number and value of those transactions breaking records in 2015. This whitepaper argues that the role of brand strategy early on, and throughout all 5 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 many industries, (particularly the technology, healthcare, energy sectors), and resulting intensity of competition; we explore why the Brand can be one of a firm’s most important business assets. In fact, the brand’s value is one of the key assets being purchased. Organizations that ignore or fail to recognize its’ 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: organizational restructuring; management team changes; combination and rationalization of product and service line portfolios; reconfiguration of supply chain and distribution 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 10-20 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 of mergers and acquisitions somewhere between 50% and 80%. 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 3-year post M&A results of three common approaches to M&A branding. The business-as-usual approach which maintains both legacy brands; acquisitions 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.