Discussions around mergers and acquisitions (M&A) can overlook the work after a deal is closed, but the right brand training can help a company successfully merge brands and return on their M&A investment. Check out March's Spotlight, written by Nick Thacker at AllenComm, to learn more about how to increase success in mergers and acquisitions.
Mergers and acquisitions (M&A) are a daily element of modern business. Closing M&A deals might seem like the culmination of months or years of work, but it’s only getting started, and the right brand training can mean the difference between success and failure post-M&A.
Since 1990, over 75% of US industries have become more consolidated, resulting in higher market concentrations and profits. So, the question is how to ensure a merger and acquisition is successful when it happens, not if it happens. But even though it’s almost inevitable, successfully merging two brands is proving difficult.
What Leads to M&A Failure?
A Deloitte report found that $10 trillion was spent on M&A in the previous 7 years, but 46% of respondents said less than half of the deals from the previous two years generated expected return on investment (ROI).
In addition, voluntary turnover increased by about 12% before or after M&A. In PwC’s 2017 M&A Integration Survey, it was found that 42% of organizations failed to fully integrate the involved companies, and 58% reported it was difficult to integrate.
The conversation around M&A is almost all financial or data-driven, but organizational change is required in order to accommodate all the differences in two companies merging together. One of the areas for the most improvement is in brand training.
Identify Crisis and Merging Brands
In the internet and social media age, it’s more important than ever to be able to distill a company’s identity down to its simplest form. But brand also extends to the types of employees attracted to the company or the culture within offices. Things get complicated when the compatible aspects of two companies contend with the incompatible ones.
For instance, The Walt Disney Company recently acquired 21st Century Fox for almost $72 billion. Everyone in the world could probably articulate the Disney brand. We’d talk about Mickey Mouse, Disneyland, animated films, or princesses. But 21st Century Fox, with a long and varied film history, had obvious brand compatibility issues. Could the Simpsons exist alongside Mickey and Minnie? Could the Alien franchise find a home in Cinderella’s castle? Fox’s sub-brands like Fox Searchlight were known for independent cinema, a far cry from Disney’s box office giants and four-quadrant crowd-pleasers.
Disney set about swallowing up the 21st Century Fox brand and discarding what didn’t fit. It also meant job loss and a more homogenized box office. Disney, with the stronger brand, found ways to successfully communicate the changes privately and publicly like the 2019 launch of streaming service Disney Plus. After only 3 months, Disney Plus had 28.6 million subscribers, all of whom can log into the service and see Homer Simpson and his family right alongside Mickey Mouse and friends. But, while a branding home run for Disney, many of the unique aspects of 21st Century Fox have fallen away.
Successful Brand Training Post-M&A
So much time, energy, and research is spent on the due diligence to vet both companies’ finances and legal issues that it’s understandable why business leaders would want a break once the deal is done. But complacency after M&A sets your company up for immediate failure. Once the deal is closed, the work is just getting started.
Here are some lessons we can learn from successful brand mergers:
- Transparent communication that is early, often, and detailed will go a long way toward easing employees’ fears. Without the context of why changes are happening, employees will probably assume the worst by default. Some employees might start looking for new jobs rather than stay and risk negative changes.
- Developing a framework to identify and measure the indicators of successful integration will show how your company is responding to the transition. Consider an extensive needs analysis to determine the training your company needs and how to implement it.
- Reshaping business processes that match between the involved companies won’t happen without buy-in from the bottom up. Brand training can help employees understand why the change is necessary and beneficial to them in their specific role. When training is not specific, it’s not effective. It’s also important that successful ideas from both companies are integrated into training. If one company simply cannibalizes the other, the cost is often human, and employee morale will decline.
- Roll out training in phases so employees don’t get overwhelmed. Mergers and acquisitions can lead to moving offices, downsizing, or a host of other practical problems, and employees will have enough on their plate. Clear direction can be supported by changing assets in training to reflect new company names, logo, or language.
Considering these ideas will be a great start to developing a plan to navigate brand training after M&A.
Investing in Change
The stakes are high in today’s increasingly-consolidated market. When billions of dollars are invested in M&A, billions of dollars have to be earned. Otherwise, the narrative can easily turn into failure. Because of this pressure, it’s easy to overlook the human aspects of M&A that can lead to success.
Brand training that’s specific and personal to the employees involved is an investment in the people behind the change. When communication and training combine, employees will be invested in the change, too. The fear of the unknown is replaced with excitement to tackle the new challenges post-M&A.