Why brand is critical to M&A success
Early brand consideration can enhance the value of a business pre and post transaction.
In the same way that a lick of paint and smell of freshly baked bread can elevate perceptions of a house for sale, refreshing a brand can help transform the value of the company going through a merger or acquisition (M&A). However, a brand refresh goes beyond set-dressing and appearance – it’s a catalyst for fundamental change and value creation.
It’s something our clients often look for us to help with. That is, enhancing the value of a business before a transaction or refreshing a brand post-transaction to signal change to stakeholders. A new positioning for the brand marks a change in the culture and direction of the business.
Brands are multi-sensorial expression of an organisation’s purpose, mission and values. For our clients, we translate business ambition to brand strategy and bring it to life through imagery, graphics, words, colours, fonts, textures, materials, sonics, scents and space (to name a few things). These audience experiences influence perceptions and behaviours.
We recently brought market leading technology, software and services companies – Calypso and Axiom – together under a new brand Adenza. This was a clear signal that the merged entity is new. The new brand is helping catalyse success behind a shared vision and values. This work piqued our curiosity about how we can serve our clients to achieve their objectives in this niche area of branding.
Integrating people, values and culture
A Harvard Business Review article summarises research which concludes that 70-90% of acquisitions fail, mostly due to poor integration. Integration is key to success and is often not considered in the right way – hence this staggering failure rate.
Further research indicates most pre-transaction analysis focuses on ‘hard’ elements such as capital allocation and operating models, rather than the ‘soft’ elements like people, values and culture. This predictably leads to challenges later down the line, especially in post-merger integration.
Leafing through the M&A approaches of McKinsey, BCG and Bain, it’s apparent that quantitative analysis alone overlooks crucial human insight essential to integration success. This is no surprise as the typical strategy consultant or corporate financier is brilliant at quantitative analysis and strategic models but less skilled in translating strategy into design and semiotics that inspire and motivate change with people.
People work is critical to M&A success. A McKinsey analysis of large deals finds that 60% of practitioners feel they should have put more resources into culture and change. This is the foundation of a brand. Brand makes ambition tangible, engaging people and directing behaviour to achieve the vision.
Delivering value through brand
A brand can deliver significant value to the M&A process, as well as saving time, effort and money in the long run, if:
- It’s considered: brand activates values and behaviours, which are essential to integration success. However, if brand isn’t given sufficient consideration when analysing the M&A opportunities (at all stages of the deal) then an opportunity is missed.
- Early enough: brand is often considered late in the process, leading to less opportunities to develop strategy that delivers desired change. Again, there’s an opportunity to increase effectiveness and efficiency here.
- With the right process: Emperor’s brand consultancy delivers research and analysis to create the right brand positioning strategy. Strategy leads execution (so should come before naming decisions and design in order to be coherent and effective).
Translating strategic ambitions into an engaging brand
The strategic approach we take to brand work involves detailed research and analysis. This is how we approach design, naming and activation. To support this, our Employee Engagement team provides our clients with short to longer-term activations required for effective culture change.
With relatively light interventions, brand thinking can enhance M&A value at any time in the transaction:
- 6-24 months pre-transaction: our brand research and analysis can help in-house M&A firms and advisers understand some of the opportunities and challenges with potential targets and integration – thinking about brand at this early stage can often create the most value.
- 6-9 months pre-transaction: developing a brand integration strategy (from brand positioning in market, through to name to design and implementation).
- 0-24 months post-transaction: activating the strategy with communications and employee engagement activities. Despite the best planning, strategy rarely survives first contact with people. Our agile approach can tailor messaging and communications as the integration progresses.
Refreshing a brand at one of these phases can help transform the value of a company going through M&A. It is a powerful signal of change to stakeholders, which is required to shift performance and achieve success.
We can increase the chances of your M&A transaction being one of the few that succeed. Curious? It all starts with a conversation. To find out more please contact Claire Stuart, Director of Brand at Emperor [email protected]
To find out more about how brand can help enhance M&A transaction value, download our toolkits:
[Download adviser PDF] - Adviser brand toolkit
[Download in-house PDF] - In-house brand toolkit