Is it love? Mergers and acquisitions ahead

Mark Smith, Senior Strategist, talks about what does and doesn't work when it comes to Mergers & Acquisitions.

2015 proved to be the year of the merger. Pfizer and Allergan, Anheuser-Busch InBev and SAB Miller (…how many past mergers does that one represent?), Dell and EMC and 2016 looks like it could be more of the same. With the current trend to consolidation in many mature markets, Shell and BG may be just the start.

The press and analysts debate the financial implications. The C-suites discuss and announce synergies, IP and growth opportunities, but, rarely do people talk about the fate of the corporate brands involved. All too often they take a back seat to the money. However, we know corporate brands are financially valuable (though we have not yet agreed a standard accounting standard for evaluation). Maybe of more importance, is that they are also emotionally valuable - for customers, stakeholders and employees. That brand stands for a promise, a reputation and a culture. 

So in anticipating the year ahead, we thought it time to learn from the past. Who got it right? What did they do? There seems to be five distinct themes that pop up again and again. And, each successful M&A seems to have employed all five.

1) They have a clear and purposeful story

When risk consultancies DNV and GL Group merged in 2003, their different business status (one a foundation, the other a very commercial enterprise), combined with their parallel yet different heritages, gave them different cultures that could have led to poor integration.  The solution was to unite behind a common purpose that elevated their work beyond commercial considerations to the real impact of what they do. A purpose of safeguarding life, property and the environment combined with a customer proposition of safer, smarter, greener.

2) They engage internally, before externally

Aviva, literally, came flying onto the market with Bruce Willis flying through the air in a cab. This was the first part of a £10m UK TV ad campaign telling us that Norwich Union was now called Aviva. Staff at Aviva already knew this though. ‘Aviva day’ saw the organisation adopt the name internally before launch. It ensured they knew the why before anyone else did.

3) They phase migration for each market

AXA successfully transferred a significant level of brand equity from a range of acquired brands, such as PPP, through a two-stage endorsement process. Instead of just jumping from one brand to the next, they considered whether it was appropriate for all their markets and when would be the best time period. Organisations can do this by building a migration framework that uses consistent decision making criteria. What’s the market situation? What brand equity does the acquired brand have? Asking these questions will help you assess how to transition to a new brand, market by market. The aim is to transfer brand equity effectively, making best use of resources and minimising customer confusion.

4) They invest time and money in doing it right

Accenture' was created following Anderson Consulting’s departure from Arthur Andersen. They then gave it the best possible start, by investing $100million in its introduction. Having survived all of its peers, that investment has seemed worthwhile. We can look to 02 and EE for similar stories.

5) They have courage, commitment and stick with it

Diageo was the result of the GrandMet and Guinness merger. Each could have been a valid name for the future, but they recognised their audience was investors and its own people and concentrated their plans accordingly despite the media disdain at the time for the name.

So, when planning your merger or acquisition, make sure corporate brand is part of your thinking. They can be leveraged as part of the deal and are intrinsic to providing a rally point for the future. Helping to unite cultures, a major cause of merger failure. Consequently, their utilisation, as part of the mergers, acquisitions and disposals process, is key. Overlook them at your peril. Ask PwC about ‘Monday’ or the Royal Mail Group about ‘Consignia’.

Photo Credit: Dfred