Winning with M&A: 6 questions to unlock brand potential

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This article originally appeared on The CMO Club.

When businesses go through major corporate mergers, splits or spin-offs, how can CMOs focus on protecting and enhancing brand value?

Mergers, acquisitions and spin-offs challenge even the most reputable and profitable companies. According to KPMG research, almost 70 percent of such deals actually reduce shareholder worth or have no impact—even after companies have spent significant time and resources on finances, operations and logistics.

Meanwhile, in the pressure-cooker process of getting a deal done, the impact on the surviving brand is often put on the back burner—or neglected completely.

Unlocking the value of brand amid monumental change is hard. Yet successful deals show it can be done. Asking the right questions about brand:

  • Clarifies business intent behind a deal,
  • Protects that intent throughout the process, and
  • Unlocks brand potential after the fact.

Whether a company is facing its first or latest merger, acquisition or spin-off, it will benefit as a brand and a business from upfront thinking and planning.

Asking questions in these six areas will protect and enhance brand value.

  • Brand and the Bottom Line. How much does brand contribute to the bottom line? In the event of a deal, find data to back up decisions on brand elements to carry forward. Working with facts vs. long-held beliefs is always better. Knowing how much a brand contributes to the bottom line helps determine—and justify—many things, including whether logos are removed, names are changed or products are retired.
  • Strategy and Architecture. Times of change present opportunities to tell a fresh story and clean up portfolio overlaps that occur because of a deal. How bold can and should you be to capitalize on these opportunities? The answer will differ for each situation. A brand’s experience will guide how much change is optimal. Leaders who take defensive postures for fear of disrupting the status quo may miss opportunities.
  • Naming. Names help companies tell a new story. Often, merging companies keep the name of the stronger brand, as was the case when NationsBank acquired BankAmerica to become Bank of America. Other times, a new name conveys transformation—such as last year, when DXC Technology resulted from the merger of Computer Sciences Corporation and the enterprise services business of Hewlett Packard Enterprises. The “X” conveys the transformative role that DXC plays in helping its clients thrive.
  • Visual Identity. Does identity reflect new vision, purpose and promise? Will changes to identity send the right signals about the deal? In 2015, HP split in two in the largest corporate separation in history. The HP logo remained with HP Inc. while the other entity, Hewlett Packard Enterprises (HPE), defined its new place in the world. To visually express the massive change, HPE also adopted a new visual identity named “The Element”—a green rectangle, to symbolize the partnership between the company and its customers.
  • Brand Experience. Are experiences consistent and optimized across channels? How should brand experience evolve to support business goals? Deliver clear, simple and relevant messaging for each audience. Customers are not investors, and vice versa. Some companies deploy acquisitions to help drive growth—uniting subsidiary brands under an overarching brand experience. Ingersoll Rand is one such company. Over the course of a century, Ingersoll Rand ended up with more than 200 brands as it transformed from an old-line machine manufacturer. To unleash the energy of its subsidiary brands and link them as an integrated whole, Ingersoll Rand found a common theme among its business units: they didn’t just make products, they drove progress. The tagline “Inspiring Progress” brought the company together under one umbrella and enhanced its image as a force for innovation.
  • Engagement and Activation. Employees champion brands and can be the most important audience during a merger or other deal. However, an estimated 20% of employees voluntarily leave companies soon after merger announcements. Losing valuable talent at vulnerable times endangers your ability to deliver on new as well as old strategies. To reduce unwanted talent losses, help employees embrace new visions and keep them engaged post-deal. In 2011, Motorola separated into two entities, creating a new industrial broadband business, Motorola Solutions. To connect Motorola Solutions’ employees more directly with the people and organizations they served, the company produced “purpose posters” that showed moments in which the technology helped people be their best. Within three months, what started as eight posters ballooned to more than 250 translated into 20 languages. The posters became the device that allowed employees to share their moments that mattered. By seeing the consumer benefits, employees saw their role in a bigger picture. In the next two years, Motorola Solutions’ stock outperformed the market by 31%.

Never Too Late

Much is at stake when companies merge or split—for the companies, employees and shareholders. And while it is never too late to think about brand, it is best to start early—and way before the ink dries on a deal. Last year, worldwide deal-making hit $3.6 trillion in a record number of deals, according to Thomson Reuters. Meanwhile, Deloitte notes that corporations and private equity firms foresee an accelerations of M&A activity this year. Brand communicates the value of the enhanced company and serves as a filter to simplify, amplify and transform. Companies cannot move forward without knowing where they are going. Brand helps companies get there with focus.

David Srere is Co-CEO and Chief Strategy Officer at Siegel+Gale. Follow him on Twitter: @David_Srere

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