Branding

Marketing Challenge: M&A Branding Scenario

By July 31, 2014 No Comments

This is our first in a monthly series of posts in which we address a difficult marketing, branding or communications issue. This month’s question has to do with acquisition marketing and branding.

The Challenge

A company with weak brand recognition is acquiring one with stronger brand recognition. Leadership wants to ensure the acquisition target’s brand does not overshadow the acquiring company’s brand and positioning. 

Brand Strategy Definition is Vital Before the M&A Event

The challenge is an interesting one concerning brand architecture. In 2006, MIT found in nearly two-thirds of 200 M&A deals, brand strategy was deemed to have low-to-moderate priority in pre-merger discussionsInternational brand architecture is a key component of a company’s overall marketing strategy as it provides a structure to leverage strong brands into other markets and assimilate acquired brands. Acquired brands need to be melded into the existing structure, especially where these brands reside in similar market positions to those of existing brands. When handled correctly, corporate re-branding after a merger or acquisition can play a vital role in communicating strategic direction and ensuring key constituencies such as employees, customers and shareholders are on the same page.

Considering One M&A Branding Scenario

Let’s assume the acquiring company has a weak corporate and product brand, and the acquisition target has a strong corporate brand internationally. Here are some of our high-level suggestions:

1) Pursue a hybrid branding structure in which both corporate or product names and/or identity symbols are combined into one name permanently or temporarily.

2) Use the most recognized brand to build strength for the weaker brand using an aggressive public relations and advertising program. Direct traffic from the acquisition target’s existing websites to the acquiring company’s site.

3) The acquiring company keeps the brand of the acquired company as a product brand or platform in their portfolio. We’d need to know more information, such as is the acquired company’s corporate brand or product brand the thing that is recognized? You don’t want to lose the brand loyalty or following, so you keep the name customers know as the product brand under the corporate brand of the acquiring company. They’ll pull that brand into a subpage of their site with the specifics of the product line, and they’ll keep that brand with the trademark and use it promotionally.

4) If the company with a stronger brand is only known in a local geographic area, consider keeping both brand names and symbols.

5) Create an entirely new identity. This strategy takes the most guts and leadership. An example of this strategy is Bell Atlantic’s transformational merger with Nynex in 2000. Executives selected the new name Verizon and in only a matter of years, consumers forgot all about the Bell Atlantic identity. Ask anyone under the age of 30…

6) As a followup, there should be a brand audit before and after the acquisition at regular intervals to gauge how perceptions and awareness change.

Final Thoughts

Selecting a branding strategy at the outset of M&A discussions is an important consideration as much of a company’s valuation is based on soft assets. Brand awareness and loyalty are often the largest soft assets a company possesses.  

Chris Slocumb

Author Chris Slocumb

Chris is the founder and president of Clarity Quest Marketing, where she leads a talented group of marketers and designers helping healthcare and technology companies achieve marketing and business goals. To learn more about Chris' experiences and qualifications, visit our leadership team page.

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