The crucial role of branding in successful M&A

October 19, 2015

There certainly has been no shortage of M&A activity in the press throughout the course of the year with two significant ones taking place just this past week – AB InBev NV and SABMiller PLC and Dell and EMC.

Over the past years numerous client experiences have shown me the significant role that a re-branding program can have in the success of a merger or acquisition. This was demonstrated to me again this year by the recent brand innovation program Tenet Partners led with the executive team of two merging companies in the healthcare business services arena, Connolly/iHealth Technologies.

Reflecting on the lessons from this successful program (see Connolly iHealth Technologies partners with Tenet to rebrand the company as Cotiviti) and past engagements, I thought I’d share with you five tenets you may want to consider if and when your company is involved in a merger, or transformative acquisition.

1. The brand(s) that emerges embodies your combined future

Always be clear that your goal is to create a brand positioning, value propositions, signature experiences and identity elements that capture what is unique and compelling about your combined capabilities going forward. In concert these branding components will signal your future trajectory to both customers and prospects, as well as to employees, the investment community and other stakeholders and influencers. This is why a future view of market opportunities and close alignment with the business strategy of your combined company are so crucial in developing your brand strategy and its creative expressions.

2. Respect and understand the legacies of the combining brands, your bankers won’t

Unless running counter to type, your M&A advisors will not generally place much weight on the loyalties built around the legacy brand/brands among customers, employees, suppliers and other stakeholders, but your executive leadership must. First, understanding equities of the combining brands among their constituencies is a crucial source of insights on the credible strengths and defensible differentiators that must underpin the future positioning of the merged company. Second, gauging the strength and nature of these equities and audience loyalties provides the knowledge needed to craft targeted messaging and activities to affect the transfer of loyalties from the legacy brand(s) to the new brand.

3. The rebranding process is a valuable integration mechanism

One of the greatest challenges of mergers, one that often determines success or failure, is management’s ability to integrate the organizations quickly around shared vision, values and strategies. A correctly executed branding process, whether conducted before or after merger, can be a very helpful integrative tool for the executive team and broader organization. With an objective view provided by research across internal and external constituencies and markets, management --through teamwork exercises --can assess opportunities and strategic positioning options in the context of newly combined competencies; reaching consensus on the best value proposition(s). As part of the integrative process, employees across the organizations are queried, engaged, informed and trained in a coordinated and unifying manner. Especially today in an environment that demands continuity of customer experience across physical and virtual channels, the branding process must reach across and engage all functions to ensure a promise made can and will be delivered.

4. It is ….a rare opportunity to shift perceptions; don’t waste it

The launch of a new brand is a unique and fleeting moment of focus when the eyes, ears and minds of a company’s stakeholders and influencers are open, curious and eager to learn what’s new. A new brand by its nature signals change. Work hard to make it positive and exciting by identifying and conveying the benefits the new brand will deliver to each key constituency and by avoiding rude, unwelcome surprises. It is a moment to plant new associations and expectations in people’s minds, and perhaps remove other ones. Of course, it is also a time to reinforce continuity of valued benefits already delivered. Make the most of it!

5. The brand protects value at risk

A brand is a financial as well as a marketing asset, and the legacy brand(s) had real, measureable economic value in the businesses before the transaction. The brand that replaces must, at a minimum, achieve the same salience, relevance and monetary contribution as the legacy brand(s) to protect business value. More broadly though, because the new brand embodies and conveys the combined businesses and the underlying strategic rationale of the transaction, its success helps protect the total economic value of the business at risk.

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