Cost-cutting is a common activity for companies looking to sell or merge. However, one area that companies are investing is branding. Establishing a strong brand position is one of the most powerful, but sometimes overlooked, tools to enhance the value of a company being acquired. And it can provide guidance and direction when integrating and merging companies, helping set the direction for the merged entity moving forward.
A brand is one of a company’s most important assets, providing a reason for consumers to choose your product or service. It can help generate strong customer loyalty as well as employee pride. A strong brand also generates “curb appeal” for other companies or private equity firms looking to make an acquisition or considering a merger. The brand is a key component for calculating the earnings multiple in the valuation process. Metrics that are important in M&A deals include customer loyalty and brand recognition/dominance in the market.
So it’s no wonder companies going through the mergers and acquisition process invest in developing a strong brand strategy to prepare. The goal is to develop a compelling brand positioning that is consistently delivered across all customer channels and is clearly embraced by employees. This brand consistency and marketplace recognition bring a sense of stability and comfort to a M&A deal. Strong brands are known for being more profitable and growing quickly, which means they usually sell more frequently.
For mergers, it’s critical to have a plan for how it will be advantageous for the market and for the employees. What can happen is if one company’s brand is much stronger, it can sometimes be the “north star” for how the merged companies will move forward. Sometimes, both brands have a strong presence and reputation, and they can maintain some of their identity even while operating as one. We at Geile/Leon consider all of these factors when we help companies navigate this transition, whether they are merging or being acquired.
Our M&A playbook helps companies plan their branding strategy to be the most effective and bring the most value. The following is a list of questions we will address with clients through our Distilled Thinking brand discovery and strategy development process:
- How do customers and employees relate to each of the brands and what are the individual strengths that each bring to the table?
- What is the reputation and brand equity of the companies that are entering into the merger or acquisition deal?
- What is the brand story we are trying to convey both internally and externally during and after the merger or acquisition?
- Do we need to create a new brand/brand identity or will one of the existing brands absorb the others?
There are many considerations and you want to get it right. Why? Because you only go to market once to introduce this newly formed brand!
For more information on Geile Leon’s Distilled Thinking Process for companies involved in an M&A deal, contact Tim Leon at [email protected].