Steps to Branding Success in Mergers and Acquisitions

Mergers and acquisitions (M&A’s) are becoming more of a norm due to the current economic climate and lack of succession planning. In 2018, the value of  M&A’s increased by 4% to $3.8 trillion in the US alone. A study done by Harvard Business Review says, “At best, mergers and acquisitions (M&A’s) have a 50/50 chance of reaching their intended results. Study after study puts the failure rate closer to 70-90%.”

So how can companies avoid the risk of failure?

Companies may look aligned on paper, but that may not manifest in action. Being proactive in understanding how to bridge the gap between two companies’ cultures will make or break the outcome in the long run. The key contributing factor is branding. In our experience, we have discovered the following steps in creating branding success for mergers and acquisitions:

1. Define Goals Going Into the M&A

Often, M&A’s are solely focused on the financial transaction; they are driven by data, such as revenue synergies and operational benefits, to close a deal. Once the ink is dried, that’s when companies start defining internal goals to meet the external expectations.

Understanding the internal goals of both companies early in the process is a vital step. It will help both companies realize the benefits of the merger or acquisition and translate how the internal teams see the end game. Leadership should be able to answer these why’s for the internal team before the deal is closed:

• Why was this necessary in the first place?
• Why does this benefit employees and customers?
• Why are we better together?

2. Involve Both Sides in Developing the Brand

When companies do not think about the people or cultures early in the deal, it’s more likely they will miss the mark on life after the merger. To increase the success of M&A’s, leadership should be transparent with both internal teams throughout the entire process. Tight-lipped leadership can end up with one side of the deal being surprised. This leads to an immediate lack of trust, a decrease in morale, distracting insecurities about employment, and a mindset shift to us vs. them. Constantly explaining the why’s and involving employees in developing new visions, values, and behaviors of the brand positively reinforce the reaction.

3. Create a Culture Team Dedicated to Bridging the Gap

A culture team is a group of individuals dedicated to defining the behaviors and values of the new brand. M&A’s are heavily focused on the financials of the deal, which can lack the human element. Companies rarely determine the compatibility of cultures before the deal closes. The following are ways to engage employees from both sides, making them feel valued in ways that start building trust:

• Employee surveys: Allows leadership to understand how their team gets work done, works with each other, and interacts with clients. Allows the employee’s voice to be heard.
• Listening groups: Cultivates an open, face-to-face conversation asking similar questions to the employee survey.
• Management interviews: Internal interviews help leadership understand the different management styles and how both companies make decisions.
• Customer interviews: Provides an objective view from each set of customers that can help address blind spots and define strengths.

4. Find Ways to Encourage Brand Living

Brand living is an intentional effort for leadership to demonstrate how they want their employees to affect the culture, treat clients, treat coworkers, and communicate. A brand should be built from the inside-out and should be demonstrated from the top-down. Companies that focus on the “new brand,” rather than operate under a legacy brand, are more sustainable in the future.

5. Take an Authentic Approach

Especially for employees that feel blindsided, the worst thing a company can do is sugarcoat and shy away from the truth. The bottom line: everything that used to be is changing. Promising job stability is a fast way to lose the trust of your employees. Externally, people are making buying decisions based on the brands they trust most. If the internal culture isn’t aligned, and there is a lack of brand trust from employees, it’s hard for a company to be in a position for success. Taking a genuine approach to the reality of the situation helps build and maintain brand trust internally and externally.

Whether yours is a large company merging with another large company or a mid-size firm acquiring a mom-and-pop shop, the challenges remain the same. Companies may look compatible on paper, but internally, a lack of brand alignment can ultimately destroy a merger or acquisition. The AEC industry is a highly competitive space where standing out from your competition can be your biggest asset. It’s important to understand the essential elements behind every brand and to recognize your internal team as your brand ambassadors.

For more on surviving M&A’s, listen to our podcast episode, Branding through Mergers and Acquisitions with special guest Donya Edler, VP of Marketing at Wood.