Despite businesses collectively spending $2 trillion per year on mergers and acquisitions, between 70 and 90 percent of mergers fail. That’s just a fact. The reasons for mergers failing are many and will depend on the businesses merging, but one factor that’s often undervalued or overlooked is the brand identity of the new entity.
When a company merges with, acquires or is acquired by another company, the good news is there are many choices available when it comes to branding. However, in most mergers, either one brand disappears or the two brands continue to operate independently of each other, according to research published in MIT Sloane Management Review.
Researchers group branding strategies during a merger into four categories:
- Backing the stronger horse–this strategy phases out the less popular brand
- Best of both–this strategy adopts the best of both brands
- Different in kind–this strategy creates an entirely new brand
- Business as usual–this strategy leaves both brands intact and independent
Each has their own set of advantages and disadvantages. Backing the stronger horse is a simple strategy and can fire up both the employees and the customers of the target brand, but it sends a signal that one of the brands is a loser, which can hurt employee morale. The benefits of blending the strengths of two companies are clear, but it can create branding confusion. Operating independently requires no branding effort, but the companies could be missing out on the opportunities that come with rebranding.
Start Early, Communicate Often
Leaders may be focused on the bottom line, but conversations about branding need to happen in the very earliest days of the merger. Getting to work on a change in brand strategy after a merger has already been announced is a mistake. At that point, you’re being more reactive than proactive, and that won’t build confidence in anyone–not your customers and not your new team.
Before any public announcements you should have the following in-hand:
- An overall branding strategy
- Market research and a general idea of how both customers and competitors will likely react
- A messaging strategy for communicating the brand change
Employees should be the first to know. The broader market landscape may change as it reacts to the news of your move, but the above three pieces of market intelligence will allow you to react to it.
Don’t Overlook the Employees
When you’re merging your business with another, you’re often concerned with how your clients or customers are going to react, and rightly so. But don’t let the employees get lost in the shuffle.
Mergers mean change, and change can be scary. That’s why it’s so important to get your employees on board as soon as possible. Branding discussions and internal communications about the merger should happen in concert with each other.
When employees feel they have buy-in and ownership of the merger–and the new branding–they will become your biggest advocates.
At Points Group, we can help you craft the perfect messaging for your brand, whether your company is a new startup, established in your space or going through a significant change like a merger. Contact us today for a free brand assessment.