Why brand design matters in mergers and acquisitions
We’re designers, not high-powered dealmakers. But even we know that mergers and acquisitions are complex transactions with tons of details to be worked out: money, assets, liabilities, jobs, titles, locations, people, and more.
Notice what we didn’t have on our list? Branding—which is often left off the list of the companies doing the merging and acquiring, or it’s treated as an afterthought at best.
That’s a mistake. After all, there’s a business strategy behind every M&A deal (one would hope, at least)—and the brand identity and visual approach can play key roles in supporting that strategy. You could also argue that brand considerations take on even greater importance during mergers and acquisitions, which can be a vulnerable time for one or both organizations in the deal: Studies show that 70%-90% of acquisitions fail, according to Harvard Business Review.
We aren’t saying that is all due to bad brand strategy or execution—it isn't. But in an environment with such a high rate of failure, it’s important to do everything you can to give your deal a chance. That’s why having a strong brand plan and the right execution isn’t just a nice-to-have—it’s a need-to-have. Let’s take a look at the options for these companies, what they need to consider, and how Chalkbox helps guide the process.
The Choices
When two companies come together, there are a few different directions they can take with the post-merger/acquisition brand identity.
Create a completely new brand
A well-known example of this approach is Verizon, which was created in 2000 after GTE merged with Bell Atlantic.
Maintain the stronger brand
When one brand is considered to be stronger than the other in an M&A deal, sometimes the new entity will keep that brand—even if the stronger brand is the one being acquired. For instance, First Union bought Wachovia in 2001, but the Wachovia brand was used for the combined company. (Wachovia was later purchased by Wells Fargo during the 2008 financial crisis, and the brand did not survive that deal.)
Blend the brands
The most famous example of this came after the merger of Exxon and Mobil, which resulted in a company named … ExxonMobil. While they don’t necessarily deserve points for creativity, both brands were already very strong, and this arrangement preserved that strength. A new logo also incorporated both names without straying too far from the originals. There are other flavors of this—such as “Safeco Insurance, a Liberty Mutual Company,” and so on.
Maintain both brands individually
Procter & Gamble is perhaps the best example here—when the company buys a brand, it typically leaves the identity as-is, even as it moves under the massive P&G umbrella along with Tide and Bounty and Crest and all the others.
Sometimes, you’ll see a hybrid approach blending one or more of these options. When FedEx bought Kinko’s, the brand for those locations became “FedEx Kinko’s” before eventually settling into “FedEx Office” and removing the Kinko’s name altogether.
The Considerations
So how do you choose? It’s not always easy. Opinions could differ on which brand is stronger—for instance, maybe one has a solid reputation and pedigree, but the other is hotter right now. (Think AOL and Time Warner, if you’re old enough to remember.) Here are some of the factors that come into play:
- Brand longevity, recognition, value
- Reputations of the brands
- Relative strength of the brands
- Whether the two brands make sense together to external audiences
- Customer loyalty
- Executives and boards (not everyone is going to want the same things)
- Possible future acquisitions
And the questions keep coming:
- When do you introduce the new brand, or the blended brand, or announce that you’re keeping both individual brands?
- Should you keep both brands for a while to take advantage of their strengths and ease clients/customers into the transition?
- If you’re thinking about a phased approach (like FedEx took with Kinko’s), just how long should each phase last?
- Do you need to pause six months or a year to sort out this combined organization you’ve put together?
The Chalkbox process
While they’re dealing with all of that other M&A stuff flying around, companies need a trusted partner that can help them work through their branding options as well. Chalkbox has served as that partner for a few clients, and we’ve learned a lot along the way. Here are three keys to our process for M&A branding:
We create a rock-solid creative brief
This isn’t all that different from our work for non-M&A clients, but it might be even more important here. When you’re working with multiple companies, that means you’re working with a lot of different people with different perspectives. It’s crucial to get everyone on the same page, and a creative brief serves as guardrails for the entire project.
We look to serve the greater good
Just like our other branding projects, the goal isn’t simply to create something pretty—it’s to recommend an approach and design an identity that helps achieve the new company’s goals. That might mean creating something exciting from scratch, or it could mean taking the ExxonMobil approach and designing a new wordmark that simply combines two names. We’re about serving the client with whatever strategy and tactics are best for the company, not what will feed our egos.
We focus on collaboration
Again, this isn’t new to us—we do it for every client. But multiple companies mean multiple sets of executives, and possibly multiple boards, which can make things a bit more delicate. We work with these blended teams and manage relationships throughout the entire process—from the branding itself to determining what materials need to be changed, timelines, and more.
Blending companies? Better think about your brand.
If you’re thinking about buying a company—or you’re in the process already—don’t leave branding out of the equation. Connect with Chalkbox today to learn more about how the right brand strategy can be part of your foundation for success.