Bayer + Monsanto. Amazon + Whole Foods. JAB Holdings + Panera Bread. It’s been a busy few years in merger circles, with more M&As on the horizon.
The directors of these companies and their assorted advisers may have been burning the midnight oil while trying to tie up the financial and legal details of the respective deals. But if anything, the toughest work lies in attempting to stitch together their organizations’ brands into one coherent story.
Weaving together two corporations—and two brands—is a process that requires careful planning, and even more careful execution. Newly formed organizations have a wide range of stakeholders, who all need to be persuaded that the brand narrative emerging from the merger is convincing and can support an inspiring representation of the new business strategy.
So how can you get M&A right? Here are three imperatives for M&A success:
1. Make employees priority No. 1
Of first priority among stakeholders are the employees—nothing can progress if this group isn’t sufficiently on board. When beginning to plan communications with employees, it is worth trying to understand how the M&A process can feel from their perspective.
It can be destabilizing for staff to watch as their corporate “parent” suddenly disappears or changes identity. It is thus essential that the new brand story make sense, offering employees a credible and exciting future. They need to feel pride at being part of this development. The brand needs to be an expression of and promise for their new, combined future.
2. Stay true to the new brand’s promise
Beware the pitfalls of breaking the promise of the new brand. To see how critical this is you need only look at the 2005 Sprint-Nextel merger in the United States. The deal made so much sense on paper, bringing together a mobile phone firm with one that specialized in infrastructure. There was excitement around the brand promise that spoke of a merger of equals creating a visionary new company. But Nextel staff left in droves, claiming that the promise of a new, joint culture wasn’t kept. Rather, the culture of the Sprint brand was imposed on everyone.
3. Ensure the new brand forges its own path
In a merger situation, a new brand should avoid tapping into only the expertise and heritage of the former organizations. It should present a tangible step into the future to justify the massive change. By making the brand reflective of an industry or area the company already seems comfortable in, it signals that the new entity has a sell-by date. Newly formed companies need to take advantage of the spotlight by challenging their people to move beyond what they have always done—and create a brand that exemplifies this revolution.
Best practices in action
At Landor, we have learned from the many merger, acquisition, and corporate restructuring projects we have worked on. Here are two examples of how we tackle M&A.
The merger of certification companies DNV and GL brought together two companies with strong heritages centered around their maritime origins. We focused on the broader vision of the sum of their parts—what the new organization could do that no rival could accomplish. The result: A year after the merger, DNV GL had achieved 4 percent organic growth and raised its equity ratio by 7 percent.
Covestro is another example of how a compelling brand story can communicate the vision of a company during a corporate restructuring. This newly formed organization stemmed from an IPO instigated by parent company Bayer AG. The aim was to create a brand that represented a global innovation company with a compelling vision for the future. The brand had to inspire employees as much as it did investors—and it worked. Employee engagement levels jumped from 48 to 90 percent after launch, and Covestro went on to become Germany’s biggest IPO since 2000, with stock selling at 12 percent above the expected price and orders for shares three times oversubscribed.
The salutary warning with merging brand narratives is of course the AOL-Time Warner merger. Like the Sprint-Nextel merger, it was promising in theory, but quickly fell apart because the two company cultures proved incompatible. There was no brand narrative that guided the organizations into the future together. Because the merged organization was not sufficiently forward-looking in its ambition, the incoherent actions of the two firms swiftly dated the brand.
With M&A, it’s all about making the former companies add up to more than the sum of their parts. It’s about offering stakeholders a future-proofed brand narrative that feels both relevant and exciting to guide the new brand forward. And it’s about bringing employees along on that journey, offering them a brand full of possibility and inspiration.
An earlier version of this piece was first published in Advertising Week.
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