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BrandsMagazineNovember - December 2018

Retaining brand value after a merger

Retaining brand value after a merger
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This year has been dubbed the ‘year of the merger’, with companies spending a record $2.5 trillion on mergers and acquisitions in the first half of the year. At this rate, 2018 will pass the all-time annual record of $4.7 trillion set in 2015, with the healthcare, digital media and tech industries proving particularly popular.

Some of the most eye-catching deals include Coca-Cola’s £3.9bn acquisition of Costa Coffee and the tussle between 21st Century Fox and Comcast over the Sky takeover. It has also been reported that Apple, the world’s most valuable company, is looking to spend some of its $250 billion cash reserve on acquisitions.

Although this trend shows no signs of abating, mergers and acquisitions are not a guaranteed route to company growth. In fact, according to the Harvard Business Review, somewhere between 70-90% of mergers and acquisitions result in failure. With so much at stake, what role does brand play, and how can companies retain and build brand value more effectively after a merger? With more than 25 years’ experience of guiding national and multinational organisations through post-merger brand management and implementation, we recommend that you consider these points before undertaking that all-important brand investment.

IS REBRANDING ALWAYS THE BEST CHOICE?
A new acquisition or merger can be an exciting opportunity for a brand owner, but it can also be a confusing time for employees and customers as familiar brand touch points evolve or change completely. Any form of brand investment needs to be carefully considered, however in our experience brand owners tend to underestimate the ‘butterfly effect’ of even a small change. This decision shouldn’t be taken lightly, as it can be the difference between success and failure!

Your starting point should be an objective assessment of your brand touch points and performance, retaining focus on your overall brand architecture throughout this process. Firstly, audit all existing brand assets and trademarks and then assess the current brand equity in order to highlight the risks and rewards of change. Market research should follow, determining current market share and the existing credibility of the brand. You’ll also need to run a check for any local legal complexities. Finally, look into each company’s internal culture to assess the risks of a full integration.

I would suggest that a rebrand is required if the acquired company is failing, has a poor reputation, is relatively small, or if you plan to make sweeping changes. On the other hand, a rebrand may be a bad idea if the acquired company has a long-standing and loyal consumer base, has unique brand strength, or if it’s the undisputed leader within its marketplace.

PREPARING TO IMPLEMENT A NEW BRAND POSITION
The values and attributes that define an organisation are all embodied in its brand, so even small changes can be jarring for loyal consumers. Likewise, changes to company culture and beliefs can quickly alienate your internal stakeholders and create reputational damage if this becomes public.

This underlines the importance of careful consideration: post-merger brand conversion can impact every branded asset, from stationery and employee name tags to content marketing materials. It’s vital that these changes occur consistently and in line with your brand values.

Depending on the complexity and feasibility of the brand migration, you might take one of three approaches:

  1. Direct and aggressive: with a short planning phase of 3-6 months, this is a demanding and complex approach that requires high investment, but it can also provide greater impact.
  2. Phase-in/phase-out: with a mid-length planning phase of 6-12 months, this involves an initial phase of brand co-existence (phase-in) followed by removal of the old brand (phase-out).
  3. Performance KPIs: on a flexible basis of 12-24 months, this approach gives consumers and trade more time to adjust, but the old brand will still need to be removed eventually.

ENGAGE INTERNAL STAKEHOLDERS
From planning to implementation, it’s vital that you engage the entire organisation in this change – not just the marketing, communications or brand management teams. Collaboration between departments is crucial for a coherent brand experience across all brand touch points.

Your internal stakeholders should be your original and most passionate brand advocates for these changes. Adequate communication before, during and after brand conversion is crucial to the success of the changes, and this process should be led by senior management.

An internal kick-off event can be a great way to create maximum impact for your brand change, while also creating a sense of shared community between the merged organisations. Investing in an intuitive digital brand portal will also give employees the tools they need to communicate your brand coherently.

REINFORCING THE SWITCH
Post-merger brand conversion shouldn’t be considered a snapshot moment – it’s an ongoing process of improvement. Securing return on investment from the rebrand will require suitable KPIs, constant monitoring and an openness to refine and adjust as new insight becomes available. shouldn’t be considered a snapshot moment – it’s an ongoing process of improvement. Securing return on investment from the rebrand will require suitable KPIs, constant monitoring and an openness to refine and adjust as new insight becomes available.

A long-term view will also be essential. Although a new logo and company restructure may bring short-term growth, this can quicklydissipate if your brand values and identities do not align with long-term business objectives. At best, this results in missed opportunities to maximise brand power, at worst this can set the rebrand up for failure. Adopting a long-term view to brand implementation and management can help ensure that the brand remains strong and future-proof in this rapidly changing technological world.

Anybody who has worked through a company merger, acquisition or restructure will know that it can be equally unsettling and exciting. To avoid an identity crisis, consider the impact of each change in detail, engage your employees every step of the way, and be prepared to compromise!

 

Jo DaviesJO DAVIES is the Managing Director of VIM Group—
a leading global brand management and brand implementation company. VIM Group helps businesses to manage brand change and enhance the performance of their brands across local and international markets. In most cases, it’s wise to invest in a post-merger rebrand or repositioning. This should be considered as an opportunity to assess what the organisation says about itself, how it behaves and how it wants to be perceived.

 

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