Mergers & Acquisitions
Branding as an engine for mergers and acquisitions
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Mergers and acquisitions (M&A) are of increasing importance to business growth. The term M&A is not just a label—rather, it is becoming stronger as part of the agenda for successful business leadership. How can branding support and guide the transaction? How can the brand motivate employees, while at the same time be suitable for the people who represent external interests? The authors put forward the thesis that a strong brand creates lasting value for the enterprise and serves as the engine for the transaction process. By Dr. Alexander Haldemann, Patricia Meyer, and Sean Ketchem (MetaDesign)
Many deals fail “Every other business deal destroys value. Only approximately every third transaction leads to a significant increase in value for the company.” There are many reasons why business deals fail. One reason is the undervaluing of ‘soft factors.’ The emphasis is primarily focused on “hard” factors such as acquisition costs, finances, legal considerations, IT, taxes, and so on. The “soft factors” are often left out of consideration. It’s frequently not realized that closing a successful deal is only possible when one works seriously with the company culture, leadership style and the corporate vision and values.
The reasons why business deals fail can be summarized as follows: •
integration Communication gets neglected “Communication is only successfully managed in a third of all business deals”.
“We need a new appearance in three months.”
The brand is often integrated into the process too late.
Preparation Selection of likely partners and performing due diligence
Negotiation Legal restructuring and completion of transaction
Merger Post-merger integration (organization and business processes)
The brand can be used as a driver for the transaction process.
Establish brand alignment checklist and scenarios for brand integration
Development of the vision and a future-oriented brand concept
Anchoring of the brand inwardly and outwardly as a catalyst for change
This is most clearly seen in the desire of many employees for a stronger emphasis on their personal feelings about the transaction, and improved, open communications during the transaction process. Questions like “Will I lose my job? Who is going to be my boss tomorrow? What is going to be different? What will remain the same?” must be addressed and answered. Transactions bring about changes that have to be tackled proactively in communications.
“Studies have shown that only 3 in 10 big deals create meaningful value for shareholders.” Bain & Company (2011)
Branding in the course of the deal It has to be clear to all participants that the earlier the topic of branding is in people’s heads, the greater the opportunity to use the brand meaningfully for the transaction. According to Accenture, one of the great myths about post-merger integration is that the process begins when the deal is closed. All elements, especially the culture of the companies, must be assessed early on (Accenture Outlook: Post-merger integration myths versus high-performance realities). Thus it’s possible for the brand to play a role at all stages of the transaction. For the preparatory phase, it’s necessary to gauge how the brands fit together, and to develop scenarios for brand integration. In the transactional phase, a business needs to work out a...
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