Behold: merger and acquisition branding—may the identity gods smile upon you
Merger and acquisition branding; why it’s not always as straightforward as it sounds.
A merger or an acquisition seems simple enough in theory. Two businesses or brands become one. Easy peasy, right? But lurking just below the surface are many challenges that should not be ignored or overlooked. All kinds of questions arise, like: do you evolve an existing brand or create an entirely new brand? Do you bring in entirely new leadership or transition former leadership to the new role? Do you keep the brands separate, or do you go with a stronger horse strategy?
Read on as we explore those questions and dig into the brand strategy and business strategy behind taking two brands and turning them into one new entity.
Why do mergers and acquisitions typically happen?
There are several reasons why multiple companies/brands might come together. The following key factors are some of the most common.
Use a merger or acquisition to grow your business.
Merging with another company or acquiring a smaller company can expand the business by combining resources, reducing costs, accessing new markets, and increasing market share, customer base, and revenue. When you combine powers with a like-minded business, merger partners can explore new opportunities previously unavailable.
Achieve economies of scale through mergers & acquisitions.
Combining resources and operations can lead to cost savings and increased efficiency instead of continuing to operate independently. It’s a strategic approach that can help organizations remain competitive, adapt to changing market conditions, and ensure long-term success in an ever-evolving business landscape. As the old saying goes—if you want to go fast, go alone. If you want to go far, go together.
You can leverage a merger or acquisition to diversify.
Acquiring a company in a different industry or market can help diversify your business. It can be a strategic move to reduce risk, enhance resilience, and promote growth. It enables the acquiring company to navigate economic cycles and industry-specific challenges flexibly. However, conducting thorough due diligence is essential, considering integration challenges and aligning the new venture with the overall business strategy to reap the benefits of diversifying successfully. Just like diversifying your investments, ensuring that all your eggs never end up in the same basket is always wise.
Vertically integrate your business strategy with M&A.
Acquiring a supplier or distributor can help streamline operations and reduce costs. Suppose you’re a company that makes computers, and you have the opportunity to acquire a business that manufactures processing chips. In that case, it might be a match made in heaven. Acquiring a supplier or distributor can be a highly strategic move that streamlines operations and yields cost savings, quality control, innovation opportunities, and market advantages. It can help a company secure its supply chain, reduce dependency on external partners, and gain a competitive edge in the market.
However, conducting thorough due diligence and integrating the acquired entity effectively is essential to realize these benefits.
Employ mergers & acquisitions to take advantage of tax benefits.
Merged companies can reap tax benefits such as tax credits, deductions, and deferrals. Tax benefits resulting from mergers and acquisitions can be significant for businesses. They can lead to substantial cost savings by reducing tax liabilities, enabling companies to allocate more resources to core operations, innovation, and growth. However, it’s important to note that the specific tax advantages can vary greatly depending on the nature of the merger, the industries involved, and the local tax laws and regulations. Proper tax planning and consultation with tax experts are essential to maximize these benefits while complying with tax laws.
Taxes can represent a considerable chunk of your business expenses, and saving on what you pay Uncle Sam can go a long way.
Acquire new talent through a merger or an acquisition.
Good employees are worth their weight in gold, and acquiring a company with skilled employees can help fill skill gaps in the existing workforce. Acquiring a company with experienced employees can be a substantial asset in mergers and acquisitions. The human factor is not to be underestimated. It’s about filling positions and securing a competitive edge, accelerating growth, and ensuring a successful integration process.
To maximize the benefits, it’s essential for acquiring companies to recognize and respect the value that skilled employees bring to the table and to engage actively in their retention and development.
Remember, you’re not just merging brands; you’re merging people, from the executive team to the most recent hire.
Use mergers & acquisitions to improve financing.
Mergers and acquisitions can provide access to new sources of financing, such as debt or equity capital markets, to fund growth initiatives. M&A transactions can be a powerful means to secure fresh capital and resources for growth. Whether through accessing capital markets, partnering with private equity firms, attracting venture capital, or benefiting from the immediate financial boost of the merger, M&A can set the stage for the new entity to embark on its journey toward prosperity and expansion.
It’s important to note that M&A transactions also come with challenges, including integration issues, cultural differences, and regulatory hurdles, which must be managed effectively to realize the desired outcomes.
No matter how the injection of new capital comes through, the merger can go a long way toward getting off on the right foot.
How can a merger or acquisition be challenging for a brand?
Consolidating two brands into one—or making an entirely new one—isn’t a walk in the park. There are definite challenges and obstacles to look out for. The good news is that if you keep these critical things in mind and have a strategic mindset, the resulting new brand can crush it.
One thing that can throw a wrench into any newly acquired company is cultural differences. Merging with or acquiring a company with a different culture can lead to conflicts and misunderstandings among employees, negatively impacting productivity and morale. There often is a new guard/old guard dynamic at play that needs to be solved. Strong leadership is essential in getting everyone on the same page and pulling in the same direction.
Speaking of leadership... a new leader, sometimes brought in by private equity, sometimes replacing an outgoing founder or inspirational leader, is an essential part of determining the new brand strategy, the visual identity, and the vision.
Another challenge that often comes with the territory is brand strategy integration issues. Combining two companies’ operations, systems, and processes can be complex and time-consuming, leading to disruptions in the supply chain, customer experience, service, and other areas.
Change management is complex, and losing employees is just a reality of any merger transition plan. Employees may leave the former parent company or brand due to uncertainty about their roles or dissatisfaction with the new management structure. But the more you can minimize employee churn and get them on board with the new brand, the more successful your new brand will be.
When considering the brand, not just the business, the question of brand equity dilution should be considered. Merging with or acquiring a company with a different brand identity can confuse customers and stakeholders about the new brand or acquired company’s values, mission, and vision.
And when you think things are under control, here comes the lawyers. Legal and regulatory issues regarding mergers and acquisitions may bring legal challenges such as antitrust regulations, intellectual property disputes, or tax liabilities.
Once the legal stuff is straightened out, the real fun stuff is the financials. There’s no doubt that mergers and acquisitions can be expensive, and if not executed correctly, they can lead to financial losses for both companies involved. The accountants must do their due diligence to ensure that the value proposition makes sense with the dollars and cents involved in the merger.
In many ways, a brand’s equity is tied directly to a brand’s reputation. If the merger or acquisition is not well-received by customers or stakeholders, it can damage the reputation of both companies involved, and that can be a lengthy and costly hole to try and climb out of.
And finally, time is always of the essence. The clock is ticking, and you better believe that the powers that be would have liked this whole deal done yesterday.
TL/DR
It’s important to remember that branding and brand transition following a merger or acquisition process is almost always challenging due to cultural differences, integration issues, loss of key employees, legal and regulatory matters, financial risks, reputation damage, etc.
But that doesn’t mean that it’s not worth doing. Because it is. But first, it’s essential to develop a comprehensive integration plan that addresses these challenges effectively.
Once you have tackled these issues, you can confidently turn your brand’s focus to brand strategy.
Evaluating your brand is essential following a merger or acquisition.
Brand strategy and corporate identity exercises are crucial following a merger or acquisition of two or more corporate brands. This work is a cornerstone to maximizing the potential of the new organization.
A unified brand identity can drive monetary valuation.
A new logo and strong brand can increase the value of brand equity for the merged entity and attract investors.
Mergers and acquisitions branding can improve your negotiating position.
A stronger brand and well-defined corporate brand name can help the merged entity negotiate better deals with suppliers, customers, and other stakeholders.
Unleash insights that support alignment through a new brand strategy.
Developing a new brand platform can help the merged entity align its values, mission, and vision with its new identity.
Unify your cultures to avoid division and drama.
A foundational strategic platform can unite teams and create a shared culture among employees from both internal teams.
Streamline integration with a shared M&A brand platform.
A cohesive brand strategy can help an organization simplify the integration process of multiple brands by providing a clear roadmap for communication, marketing, shared objectives, and other activities.
Translate financial/strategic rationales into a unified val prop.
A strong brand can be created to help communicate the benefits of the merger or acquisition to customers, investors, and other stakeholders.
Maintain brand equity, customer references, and digital footprints.
A new brand can help maintain customer loyalty and prevent confusion among stakeholders about merged brand identities.
How can Parliament help?
Perhaps our strongest superpower in merging legacy brands is our ability to offer an experienced outside perspective. When you’re on the inside, you’re close to the merger process and have a good deal of baggage that comes with one or both of the brands. We engage with a fresh perspective and have experience driving toward strategic business decisions.
Another critical factor Parliament brings is experience. We’ve been on this ride before. We’ve worked with merging companies big and small, we’ve learned the pitfalls, and we know what it takes to emerge with a stronger brand and a unified future direction.
Last, and probably most importantly, we specialize in facilitating the foundational work—the mission, vision, and values—that are all important for brand transitions like mergers and acquisitions. Being aligned as internal and external stakeholders in a company on these core elements is essential in building successful brands that can make informed decisions and move toward a shared vision.
To learn more about how Parliament helps brands wade through the complexities of mergers and acquisitions strategically, let’s chat .
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