The Eight Principles of Branding a Merger

Merger activity is positively frantic—hundreds are initiated each week. But mergers can too often be minefields. McKinsey & Co. claims that nearly 80% of mergers don’t earn back the costs of the deal itself. Other studies show that the average merger has a 50% chance of resulting in reduced productivity or profit. What’s more, mergers, and the talk surrounding them, can hurt stock prices. And mergers typically produce confusion, conflict, fear, anger, and uncertainty among employees. This leads to talent raiding—other companies’ scooping up valued employees who are worried about their futures when distracted executives need them most.

Altogether it’s not a very pretty picture. And a great deal of such problems can be blamed on the postmerger integration process, or lack thereof. With this as a backdrop, we’ve developed what we call the eight principles of branding a merger:

1) Remember: The brand is the merger. Like it or not, the world will see the new brand as a symbol of the “why?” behind the merger. Developing the corporate brand so that it reflects the “why” accurately and appealingly is critical. It can happen only if you ask the same appropriate questions throughout the merger negotiations that you ask throughout the branding process:

* Why and how does our growth depend on this merger?
* What does it do for us that we could not do on our own?
* What can we expect from the future?
* Will this merger shift our values, mission, or vision?
* What do Wall Street, our employees, and our customers expect from us?
* Can we manage these expectations? How?
* What characteristics and competencies combine—and live—in our core brand?

Failure to understand and articulate the brand will likely lead to failure of the merger itself.

2) Exploit initial interest. Corporate visibility among the media, employees, customers, shareholders, and regulators is at an all-time high during the announcement of a merger or an acquisition. Think through and prepare clear, concise, consistent ways to communicate the business logic behind the deal to all audiences. Good and timely corporate communications will influence the opinions of all constituencies. Early communications, just after the announcement, will set the tone, create the first impression, and pave the way for overall merger success.

3) Leverage the brand. The intensity of the merger can offer moments of creative brilliance if you actively consider the brand’s role in the deal. It’s common, for example, in announcing the deal, for the big fish to swallow the smaller, along with its brand. This is not always good for long-term brand-building. Granted, sometimes it can pay to adopt one or the other of the existing corporate brands, if that brand will work hardest on behalf of the merged company and accurately reflect the combined vision and intent.

And of course, sometimes other considerations force both brands to be subsumed with a brand new one. For instance, when pharmaceutical firms Ciba-Geigy and Sandoz merged in 1996, they chose to call the resulting company Novartis. Alternatively, the two merged brands can both live on in the new corporate brand, as is the case with ExxonMobil.

4) Take note: Bankers don’t give a hoot. About your brand, that is. Bankers are necessary, but they are focused on closing the deal, not on the long-term care and feeding of the brand—even though, in the end, the brand will be much more valuable than the deal itself. It’s up to you, as senior management, to defend the brand as a merger is contemplated. Keep the bankers out of the communication business.

5) Create internal buy-in. A merger can be very scary for employees, who typically feel apprehensive when they start to think about what it means for the business, and for them personally. Carefully thought out and well-executed internal communications and the infrastructure to support the brand over time will pave the way.

6) Avoid the schizophrenic brand. Consistency is key to building brand credibility. Be sure to coordinate communications so that one merger partner does not unintentionally contradict the other. The designation of a single corporate spokesperson, a chief communications officer for both sides of a merger, indicates the acceptance of consistency as a critical element.

7) Communicate the brand for keeps. Take the communications offensive and control the chatter. Develop a meticulous brand strategy and support it with new corporate communications that accurately represent the new entity. Talk to all your constituencies, frequently and consistently.

8) Think global, act global. The world keeps getting smaller, which will profoundly affect mergers and acquisitions. Consider, and heed, the global impact and implications of every single communication. It’s a new kind of global thinking about business: a world without preconceived ideas…a world without barriers.

James Gregory is founder/CEO of CoreBrand, a marketing and branding firm based in Stamford, CT, and the author/coauthor of four books, including “The Best of Branding: Best Practices in Corporate Building.”