How to Maximise Brand Value During and After the M&A Process
The brand is an organisation’s most valuable intangible asset, making up to 20% of a company’s overall value (Brand Finance, 2020). And yet, it is too often treated as an afterthought in the M&A process. The current M&A process is usually strictly financial, with brand integration only taking place once the M&A transaction has been finalised and implementation has commenced. This is a missed opportunity. Without looking into brand value and brand health, what forms the basis of the M&A strategy in the context of the brand? Will both brands take equal positions, or will one take precedence?
Follow our 7-step approach, based on best practices from over 2,500 rebrand cases:
Where does the brand (and brand value) stand in the M&A process?
Factual, quantifiable brand data should be collated and analysed right at the beginning of the process — what I referred to in a previous blog as ‘The War Room’ — least because:
The brand is a catalyst for mergers and acquisitions. A brand’s overall health and performance generate as much interest for potential mergers and acquisitions as a business’ other financial assets. Strong brands — ones with a good reputation, awareness, and customer loyalty — are often part of what makes a prospective merger a viable one.
The role of the brand is changing. Brand’s role in business and society continues to evolve. The rise of ESG factors as a mainstream metric for businesses has changed corporate conversations, shifting the focus from shareholders to stakeholders. It is no longer about merely meeting financial objectives but more about making sure that the company’s values align with those of customers, employees, and investors. And the brand plays a crucial role in conveying these values.
In his foreword to our book, ‘Future-Proof Your Brand’, Ralph Hamers, former CEO and Chairman of the Executive Board of ING, and current CEO of UBS Group, says of brands: “…[brands have now become] a reference point that connects, engages, and brings purpose and meaning. This is a relatively new role for brands, but an increasingly important one, because a relevant and differentiating identity is a condition for a strong reputation and sustainable success. It creates competitive advantage, contributes to profitability, and is both an enabler and success factor for constructive change.” Recognising this helps create more opportunities to maximise brand value during and after mergers and acquisitions.
Mergers and acquisitions are never just the coming together of two (or more) financial entities. They involve the merging of separate identities, cultures, workforces, and architectures.
Gauging brand compatibility early on is key to seamless transitions down the line. Mergers and acquisitions are never just the coming together of two (or more) financial entities. They involve the merging of separate identities, cultures, workforces, and architectures. Finding out the brands’ compatibility — or lack thereof — early on helps inform integration and transition strategies. There is no longer a risk, for example, of finding out too late that the acquired brand poses a threat to the acquiring brand or vice versa and the risk of spending marketing resources on brands that turn out to be incompatible with the acquiring brand or target market is also eliminated.
7 steps to a successful rebrand
A practical step-by-step plan for brand, marketing and communication managers.
How to maximise brand value during and after the M&A process
The value of a brand is not just essential when buyers are deciding whether to acquire the brand. Maximising its value during the M&A process through clear and strategic integration can help establish brand value post-M&A. This, in turn, helps impact the merger’s overall value and long-term viability.
“Maximising brand value during the M&A process through clear and strategic integration can help establish a strong brand value post-M&A.”
Here’s how the brand value can be maximised before, during, and after the M&A process:
Include brand assessment in due diligence. Brand due diligence helps buyers make favourable financial decisions on their acquired brands and identify value-creating opportunities early in the process.
Incorporate the brand in the M&A integration planning and execution. Leveraging a fact-based brand portfolio helps effectively manage the inflow of acquisitions for decision-making on acquired brands. In VIM Group’s brand impact analysis, for example, we use brand data to analyse its value and plan the timing, budget, and execution of M&A strategies.
Monitor and evaluate brand value post-M&A. Companies should continuously monitor brand value past the transition phase to measure the impact of the merger and help inform future strategies.
The brand can no longer be ignored in the M&A process
One study shows that up to 60% of M&A deals fail. Other studies even put the average fail rate between 70% and 90%. This despite the fact that companies pour in billions of dollars in investments to make them happen. A change in the M&A process is long overdue, and the brand’s capacity to create value in mergers and acquisitions can no longer be ignored.