Two companies joining together as one is a beautiful thing.
Celebrating the company merger is certainly in order, but before you pop the champagne, have you considered how the merger affects… you guessed it, your brand?
A merger or acquisition impacts all stakeholders in a company - the employees, the customers and any existing investors. Externally, it has significant implications on the way your company is perceived in the market by both competitors and potential customers. How you approach and manage your brand throughout the merger process will be crucial for success.
Let’s start by thinking through the external branding. Mergers and acquisitions complicate the existing brand architecture of both companies, so it’s important to be intentional about the combined brand moving forward.
You have a few options: (1) pick the stronger brand and use that as the company name moving forward, (2) create a separate brand that encompasses both company names, perhaps as product, or (3) some combination of the first two.
Moving Forward Depends on Which Brand Has Equity
You may be wondering how you decide which route to take. Well, that decision comes down to a simple question, which brand has greater equity - or - has more ability to carry the company into the future?
If neither brand holds much equity in the market, you’re starting from scratch. However, if one brand is dominant, or both brands have strong equity, it’s time to weigh the options.
Merging Two Companies Under the Same Roof
Ethology, a digital marketing agency and Tallwave portfolio company, acquired SEO firm EngineWorks in 2011. At the time, both companies had only been around for a couple years, but EngineWorks had arguably more brand equity. The executives of both companies agreed to keep the Ethology name and fold EngineWorks’ impressive SEO capabilities into the Ethology arsenal.
This may seem counterintuitive, but Ethology’s brand messaging and reputation provided a better platform for the company moving forward. EngineWorks was known very specifically for SEO marketing, whereas Ethology was known for digital marketing across many channels. When two companies are coming together, they formed a stronger organization, under a brand that enabled them to grow into the future.
It’s important to consider the current circumstances, but also think into the future and determine what will lead to enduring success.
Taking the Opportunity to Start Fresh
A merger or acquisition can also serve as an opportunity to reposition and reframe your company. We saw this with Tallwave client 5th Dimension Logistics, a payment processing company that acquired Superior Financial Service, a service provider in the payment processing space. The team at 5th Dimension created an awesome product, but due to their branding, had a hard time connecting with potential customers. They knew they were fighting an uphill battle, especially since most people though they were a trucking company at first glance.
In 2015, 5th Dimension acquired a similar firm and used the acquisition to update their brand. They took the opportunity to go bold, introducing a new look and new messaging that reflects the leadership role the company seeks to play in the industry. Relaunching as Sparrow gave them a clean slate, differentiating their company from the competition and creating a stronger brand.
M&A + Rebrand = All About People
While managing the external message of who you are and what you do is important, you can’t overlook the insiders, the employees of each company. Going through a merger or acquisition as an employee can be challenging and confusing, you must give everyone a purpose and identity to rally around.
In the case of the EngineWorks acquisition, the executives were brought together immediately to help with messaging and give the entire team ownership in the change. This creates a sense of attachment to the new, larger company and allows each person to play a crucial role.
The same was true for Sparrow. By being honest with employees and painting a positive picture of the future, people will adopt a sense of ownership and embrace the changes.
“The best thing we did for our company was to rebrand and ask our employees to participate. The company is no longer something that was founded by my business partner and I. It is an entity that we reshaped together and each person here feels some ownership of who we are to the world.” - Matanda Doss, Founder of Sparrow
While mastering the people management side of things is always tricky, make a point to talk openly about the purpose of the acquisition, the vision for the future and how the team can contribute to ongoing success. Then get the team involved in the process.
Strong brands are built from the inside out, so making sure operations, values and cultures are aligned internally before the merger will help your company deliver on the promises you make to customers. Your brand perception is ultimately made up of customer experiences, and your employees deliver those experiences. By managing internal expectations, you are also managing external interactions and creating a coherent and consistent brand experience.
Externally, be thoughtful about how to approach the brand architecture after a merger or acquisition and commit to providing clarity to existing and potential customers, as well as investors and those in your industry. Internally, take the time to bring everyone into the process, hear their input and give them a story to believe in. This not only guarantees happier employees, but will allow your company to perform exponentially better post acquisition.
Okay, now time to pop the champagne.
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Written by Robert Wallace