Mergers and Acquisitions: A Checklist for Success

M&A activity is bouncing back to life. The pressure to grow in a sluggish economy, together with the disruptive changes brought by AI and other emerging technologies, makes M&A a logical strategic option for businesses seeking to fill short-term capability gaps and lay the foundation for sustainable, profitable growth.

But, while the business rationale may seem clear, the failure rate of corporate marriages tells a starkly different story. To paraphrase Samuel Johnson, most corporate marriages are a triumph of hope over experience and, according to many studies*, between 70 and 90 percent fail. The reasons for this perplexing statistic are many and varied. They range from inadequate due diligence, questionable strategic fit, operational complexity, integration difficulties, and cultural clashes.

There is, however, one critical dimension that does not receive enough attention, yet is inextricably linked to value creation.

The Brand Dimension

In the rush to navigate the complex, taxing, and time-sensitive nature of M&A, the brand dimension is often pushed aside. It is treated like an afterthought—a soft issue to be handled later when all the hard decisions on cost-savings and synergies have been made.

However, as communication milestones approach, the importance of the corporate brand suddenly surfaces. Executives are caught off guard. Political tension rises. Communications teams scramble to address it. I’ve seen this scenario play out countless times over the last 20 years and I can count on one hand the companies that have successfully avoided these land mines. Why is this?  The answer is puzzling for two reasons.

The Psychology of Change

First, a brand is a strategic asset closely tied to a company’s ability to create value, drive preference, and build competitive strength. It should, therefore, be a top priority during an M&A process.

Second, brand plays a critical role in managing one of the most overlooked aspects of M&A: the psychology of change. M&A events are emotionally charged, full of uncertainty and upheaval. Employees and customers alike experience stress as familiar routines give way to uncertainty and doubt. Anxiety creeps in and people fear the worst.

The reality that is all too frequently overlooked is this: a well-managed corporate brand puts the focus on the future, it helps people through the emotional turbulence of M&A, creating momentum needed to realize the expected value of the transaction over time.

The Checklist for Success

To help clients through these situations, we have developed a brand checklist with practical best practices. While certainly not exhaustive, these guidelines will help executives manage the brand dimension effectively.

  1. Bring in your branding partner early.
    This first point might seem self-serving, and indeed it is – it makes life easier for everyone. Brand evaluation and strategy is a key part of the due diligence process and too many times we are brought in too late to prevent early missteps. For example, in one recent merger, there was deadlock over which name to use. Both parties wanted to retain their corporate name and without data, it became emotional. The deadlock was broken by customer research measured against strategic considerations. Having an up-to-date assessment of brand equity can be a key card to play when entering negotiations.
  2. Form a Brand Council.
    A  carefully structured Brand Council comprising key executives and business leaders from both organizations ensures that brand strategy aligns with the rationale and business objectives of the merger. It should have a clear mandate with decision-making authority.
  3. Create a brand roadmap.
    Once all elements of the M&A operation are gathered, develop a brand roadmap. The roadmap should align brand milestones with other workstreams, such as operations, technology systems, and regulatory processes. It becomes a guide for keeping brand considerations front and center.
  4. Form a brand taskforce.
    M&A deals often require existing employees to double their workload, risking burnout and affecting business performance. Establishing a brand taskforce can mitigate this risk. In a merger, ensure the taskforce includes members from both organizations.
  5. Use data to make decisions: Conduct a brand analysis and business risk assessment.
    What is the strategic value of the acquired brand? Does it play a role in new markets? Is the acquisition accretive or transformational? The answers to these questions have profound brand implications. It’s not a time for guesswork, personal biases, and intuition. Data-driven insights are essential for making decisions, so consider hiring a third-party research firm to provide unbiased insights. Additionally, assess how competitors might exploit vulnerabilities during the M&A process.
  6. Conduct a culture assessment.
    Cultural differences are usually THE major cause of great success or epic failure. Therefore, integrating cultures to form one that aligns with the business strategy is essential. Benchmark the desired culture and reinforce it proactively throughout the integration process.
  7. Set the vision.
    M&A deals can cause uncertainty. Establishing a compelling vision for the future helps “sell” the deal internally and externally. Involve employees first before making external announcements. A clear vision guides communications and ensures alignment of resources, talent, and decision-making.
  8. Develop a brand strategy.
    A strong brand strategy linked to a clear vision helps unify employees and reassure the market. This strategy should be communicated as a compelling story to inspire and build confidence in the new entity.
  9. Look beyond NewCo.
    Give the company a name, and do it early. A name provides a focus. It brings the future forward. Naming is a delicate process, especially in mergers, where both sides often resist being seen as the “acquired” party. Decisions should be based on strategic criteria and quantitative analysis rather than subjective preferences. Developing a new name can take 3-4 months, so plan accordingly. Ultimately, the best name is the one that is free and clear for you to own and build into a brand.
  10.  Bring the brand alive with a visual identity.
    It’s a well-known fact that the human brain is known to remember images better than text. Strong visuals connect with an audience faster and with greater emotional power. Even when a name does not change, a refreshed visual identity can recast the old image to fit the new strategy, signaling a fresh start to employees, customers, and investors, and creating enthusiasm about the new direction.
  11.  Avoid the inertia trap in product and brand integration.
    Leaving brands and products adrift without a clear integration strategy leads to confusion. A product and brand integration roadmap ensures a smooth transition and avoids missteps that can confuse customers and create internal divisions and misalignments.
  12.  The brand launch is not the end of the story.
    The brand launch has to be carefully planned to maximize impact. The inherent danger is that it is often regarded as the end of the story. The pressure is off, people want to relax and get on with their work. In fact, the hard work has just begun. Success requires sustained communication and alignment post-launch.

Summary

Mergers and acquisitions can be valid strategic options for businesses to fill capability gaps, leapfrog competition, and amplify value. The journey to creating a new commercial reality and realizing the expected business benefits is fraught with difficulties. Branding can be a strategic asset leaders can utilize to manage change, facilitate critical decisions, and create momentum towards a new future.

*Harvard Business Review; Don’t Make This Common M&A Mistake
*McKinsey; A new generation of M&A: A McKinsey perspective on the opportunities and challenges
*Deloitte; “Planning” to Capture Mergers and Acquisitions Operational Synergies Perspectives on the Winning Approach