Put the brand at the centre of mergers and acquisitions
If only because of the brand value
Laurens Hoekstra
Co-CEO
This blog is a call to the buyers in the coming wave of mergers to pause and consider the role of the brand in mergers and acquisitions. What opportunities open up for the brand after a merger or acquisition? Unfortunately, a large proportion of mergers turn out to fail in terms of shareholder value: the whole ends up worth less than the sum of its parts. It is of course very easy to say that this could have been prevented by paying more attention to the brand, but going blindly on share value is no guarantee of success either.
Share value versus brand value
It is a fact that on average 15% of goodwill consists of brand value. Surely that is reason enough to treat the brand as a strategic asset from the very start of an acquisition. The merger between Ahold and Delhaize is seen as a careful coming together of two large and respected brands. Even though Ahold holds 61% of the shares, externally – and above all at brand level – the deal is presented as a merger of equals. That way these two strong brands are not played off against each other, and the merger is seen as strengthening the brand perception of the Albert Heijn and Delhaize stores, in the home markets of the Netherlands and Belgium as well as in the international (growth) markets. There are also mergers that do not run so smoothly, or that at least get off to a messy start. The merger of the Ziggo and UPC networks, for instance, caused a great deal of inconvenience and grumbling among consumers. The road to an optimal brand experience for the new combination is still a long one, and it remains to be seen how the cable company will develop as a brand as well.
Invest more in brand management
Advisers often pay too little attention to the brand during a merger or acquisition process. And that is a missed opportunity. The brand is a strategic enabler, a strategically important factor that belongs at the very top of the agenda in mergers and acquisitions. The brand is no longer ‘the brand manager’s thing’: it is becoming clear to more and more organisations that a brand has demonstrable financial value. That makes the brand and brand management strategic starting points for every activity in a merger too. This applies not only to external activities, but above all to the shape of the internal organisation. When two corporate cultures merge, committed and motivated employees play a crucial role in the overall valuation.
The brand in the war room
What is the impact of the merger on the brand? What is the proposition of the combined product? Questions like these deserve full attention when the board and the advisers who have joined them sit down in the war room to determine the tactics for the coming merger or acquisition. Those tactics need to go further than a simple sum, further than the combined share value. The real added value lies in the attention paid to brand value. So invite the brand manager along as well and let them make clear that it is precisely in this process that the brand can be deployed commercially and strategically – using brand analytics, for example. So that brand awareness can then be spread over the merger like a warm blanket.
