Global disruption since the pandemic has triggered an increase in strategic brand acquisitions and divestitures as companies search for higher growth through competitive edge; and since branding is integral to market edge and market positioning, it’s unsurprising that brands are now playing a greater role in recent M&A decisions. 

‘…companies redirect management resources and funds into those parts of the business with the highest growth potential and where they enjoy a distinctive competitive advantage’. PwC 2021

Added to this, and accelerated by the media, public opinion and consumer behaviour, is a much sharper focus on Environmental, Social and Governance criteria (ESG) and the need to Integrate and embed ESG into brand values and company culture. As a result, brand purpose, brand values and organisational culture play a more significant role in due diligence and in the assessment of value and risk; financing options may be fewer and more costly for companies that are not ESG friendly. 

Although essentially still an intangible asset, branding is now a recognised game changer for buyers and sellers in the M&A arena, so optimising brands for a merger or acquisition needs careful planning.   

How to optimise brands for growth and competitive edge

The need to optimise brand as an asset in M&As is self-evident since brands contribute between just under 20% to well over 50% of company value.  See Forbes –  

An analysis by the Marketing Accountability Standards Board (MASB) shows that brands contribute on average 19.5% and in many cases well over 50% of enterprise value when the impact of brand on firm cash flow, profits and firm value are properly measured. Forbes

Therefore, to ensure the merger or acquisition adds up to more than the sum of its parts, IM’s point of view is that branding must be considered at the start of the M&A process.  Our 3 broad considerations for the start include: 

Brand architecture 

The investment strategy and rationale should guide brand architecture; whilst branding provides stability through purpose, vision and values, it must be adaptable to market forces in order to optimise market opportunities. 

Customers 

For clients, customers and guests, minimising friction throughout the change needs to be handled sensitively. M&As often present an opportunity to refresh the current brand during the integration process and a chance to review brand foundations based on the beliefs and strengths of the combined brands. 

Stakeholders

As with most decision making, it is best to take customers, employees, owners and all stakeholders with you on the journey of change. If rightly managed, taking both rational and emotional needs into consideration across all relationships and across all brand touch points will make a contribution to the brand and to its market value.

Integration of brand marketing in M&As  

Going a step further and looking at how to tackle the above from a practical organisational point of view, McKinsey underlines the importance of leadership in the strategic direction of the brand within the newly formed organisation. In their experience, which includes interviews with M&A executives, they state: 

‘Marketing should lead the organization in developing fresh, compelling value propositions and setting the new organization’s brand strategy.’ McKinsey 2020  

With above market growth being the clear target, they go on to cite 6 core aspects in the process of integration of brand and marketing to optimise brand delivery by the organisation:

‘Marketers should then lead the delivery of the value proposition and its narrative to generate above-market growth’ ’ McKinsey 2020  

Branding for M&As in 6 steps 

1. Brand story. Define the new organisation’s value proposition and the brand pillars on which this is founded, including brand purpose, brand vision and values.  Articulate this in a way that is understandable and engaging.   
2. Objectivity. Due to the emotive beliefs and biases that occur when bringing two or more brands together, an objective, fact-based approach to setting brand strategy is needed; rigorous audits and research-based processes that will pinpoint the optimal brand positioning will yield the best outcomes. 
3. Market segments. In light of the new opportunities made available by bringing two organisations together, refresh your view and approach to both B2B and B2C markets – from demographics, psychographics and behavioural trends to global reach and regional or local differences. 
4. Service. Proactively delight your valuable customers and minimise disruption, whilst at the same time assessing the long-term value of your entire customer base in the light of newly acquired strengths.  
5. Value. Plan for consistent brand delivery over time to build brand equity; include all brand touch points taking in pain points as well as opportunities to delight.  To optimise the brand, identify ways to include employees, partners and all stakeholders in the journey.  
6. Realism. Take on board less rather than more from the first day of the takeover.   Led by the newly formed company’s value proposition, the key scope should be: securing the best talent, keeping customers well informed, ensuring systems e.g. CRM are integrated, creating a workable brand and marketing structure – and, ignoring the nice to haves until a later date. 

Brand mergers and acquisitions are set to keep growing. 

PwC is clear that the growth in M&A activity is set to continue ‘with a greater variety of deals being undertaken to meet the growing complexity of challenges facing companies.’ 

This has been accelerated by the need to embrace technology-led infrastructure solutions that will meet changing consumer, employee and investor expectations; likewise, M&As are increasing in those sectors hard hit by the pandemic e.g. airlines, cruise operators, hotels and hospitality; for these sectors, where repurposing and completely re-imagining brand experiences are now inevitable, it is the proven, trusted brands that come out on top.   

How can IM London help? 

Based in London, we’ve been established in branding and marketing for over 20 years and offer a full spectrum of brand services – from brand audits and c-suite consulting to market research, brand purpose, vision and values, to brand identity, marketing roll out and integration. 

Our expertise is in professional services, travel, hotels and property.

Please contact us any time for advice and a free consultation:

Email us at  hello@imlondon.co.uk or hello@imdubai.ae

We would love to hear from you!