Whether a larger company is absorbing a smaller brand or two entities are merging to form a new company, branding plays a critical role in the success -- or failure -- of the outcome. By creating a comprehensive branding strategy that takes culture, customers, and communication into account, organizations can set the stage for greater success with M&A activity. Here are four tips for developing a strategy that protects existing brand values, which are often an important asset driving mergers in the first place.
1. Don't assume you understand the acquired company's culture and brand.
Going into a merger with the wrong assumptions can damage brand value and financial vitality. Take the Quaker Oats and Snapple merger, for example. Quaker Oats already managed Gatorade and assumed it could fold Snapple into the same distribution and management process. One problem is that Gatorade and Snapple are very different brands, with the sports drink selling well in supermarkets and Snapple performing best in smaller channels like convenience stores. At the time, Snapple also had a very successful marketing campaign that resonated with its target audience. Quaker Oats management stepped into that arena without fully understanding the branding, resulting in poorer performance and customer engagement.
Acquiring companies should take time to conduct comprehensive research and listen to the SMEs of the acquired firm before making branding, product or customer service decisions.
2. Understand how customers may react so you can approach proactively.
Customers often react to merger announcements with suspicion or fear, and it's not without reason. Over the years, studies have shown that customers feel less satisfied with service or products in the years following a merger, and they often worry that the brand they've supported is going to substantially change.
Organizations can help customers relax a bit about mergers by being upfront about what will change and what won't. Many customers simply want to know that the products they rely on will still be available and that price points won't change substantially.
3. Design and implement a communication plan.
Communication is critical to M&A success. What, when and how you communicate all matter, so even before a merger is a strong possibility, start creating a plan and ensure everyone follows it. Announcing a potential merger too soon -- especially if you haven't fully agreed to move forward -- can cause confusion and worry for no reason. Announcing it too late -- especially if information about the activity has started to leak -- casts shadows of suspicion on the activity and makes it look like you wanted to hide the transaction. Work with strong PR, marketing, branding, legal and compliance teams to develop a communication plan that protects your brand, consumer interest and M&A transition.
4. Keep employees in the know as appropriate.
Finally, ensure your communication plan accounts for employee training and knowledge. Employees have as much (or more) at stake as customers, and keeping them in the dark about mergers isn't good form. You won't want to announce merger potentials to the entire team before the final decisions are made, but let employees know as soon as possible and provide them with the information they need to deal with customer questions and concerns. Consider creating scripts or FAQs and publishing them on shared internal web portals so employees can reference them as needed.
By keeping culture and communication at the forefront of your M&A plan, you can improve your chances of success and diminish any negative impact on branding.