Mergers & Acquisitions
Brand Merger Strategy: The Step by Step Guide
If you examine successful business mergers, you’ll find businesses that followed an effective integration plan and brand merger strategy. Not only did they ensure their underlying financials were in sync, but they also worked tirelessly to combine their business functions, personnel, and organizational culture successfully.
And merger failures? You’ll find a trail of missteps, such as businesses not performing financial due diligence beforehand, failing to recognize the incompatibility of each business’ respective goals or culture, or failing to manage change within the new organization. You may even be surprised to learn some businesses merge without any kind of integration plan at all.
When mergers are successful, it’s because the two companies create and execute a plan for integrating every aspect of each company, from their bank accounts to their office parties to their brands. In fact, while often overlooked, merger branding is essential to an effective merger or acquisition. An effective brand merger can boost the new organization’s sales, revenue, and market share. However, when a brand merger is an afterthought, companies may see customers, employees, revenue, and market share slip away.
What Is a Brand Merger Strategy?
When two businesses merge, the new entity needs a brand that will reflect the synergy of the two companies and be well received by its customer base. However, it’s critical to understand that each of the two companies has established a certain amount of brand equity with those they serve. As such, merger branding should be viewed less as a development process and more of a transition.
During this transition, brand managers and marketing professionals must guide customers and the entire organization from the old brands to the new one. While they do, they have to help all stakeholders perceive and derive greater value from the new brand than from the old.
It’s a tricky process and one best not performed overnight. Nor, in the midst of all the other M&A activities, should it sink to the bottom of the priority list. Successful brand merger strategies require the full support of senior leadership and the use of significant business resources within the new company.
Four B2B Merger Branding Options to Consider
Not every company requires an entirely new brand, developed from scratch. Many don’t. Many business mergers have seen success using one of the following strategies:
Retain the Identity of Both Companies
When a large company acquires one or multiple companies, it will use an acquisition branding strategy that allows them to continue to operate as separate brands. In practice, you might see the logo of the larger brand at the bottom of ads for the smaller brand. This strategy allows the large company and its subsidiaries to retain their brand identity and equity while communicating their connection to the public.
Fuse the Brands Together
When two companies are in the same industry, sell similar products or services, and share a similar vision, it often makes sense to fuse the two brands. Marketing teams will collaborate to find points of parity and use them to craft a fusion brand. This new brand may blend graphics, logos, and names from the old businesses to describe the newly unified organization.
The “Stronger Horse” Strategy
The “stronger horse” strategy is used when it makes sense to go with one brand over the other. In these cases, one brand will either be much more well-known, have a much bigger customer base, or have stronger growth potential than the other. The most well-known brand doesn’t always translate to the “stronger horse.” You might have a large company with reputational challenges merge with a smaller one with a well-regarded brand. In this case, all other things being equal, you’d opt for the smaller business as it has greater brand growth potential.
Create a New Brand
Of course, you can also create a new brand identity. Doing so is often necessary if the merger results in a radically different entity from the two companies that formed it. It can also be an effective strategy when the new company is entering a new market, seeking a fresh start in an existing market, or wishing to distance themselves from bad press one of the companies previously faced.
Six Steps for Merging Two Brands Together
No matter which strategy you choose, the basic principles for an effective brand merger are the same. You need point people, a plan, deliverables, and consistent communication, monitoring, and evaluation after the launch.
1. Establish a Team to Oversee the Migration
To begin your merger, you need the right team in place. Establish a committee of at least three to five staff, including marketing, branding, and management members, who will serve point on the merger. Clearly define the roles and responsibilities of each team member throughout this project, which should be expected to last up to two years.
2. Inventory and Audit Branded Assets
Before determining which strategy is most appropriate, your team should examine all of each company’s digital and physical brand assets. Doing so can help you better understand the strengths and weaknesses of each brand, which can inform the strategy you select.
An inventory can also help you determine which brand assets will need to be updated and anticipate the hard costs the company will incur. For example, your final list may include items like building signage and vehicle graphics, as well as online marketing and digital marketing assets, among others. You can use that list to estimate the costs of updating each item, which can help you determine a budget for the brand merger.
3. Create a Merger Plan and a Migration Plan
Develop a merger plan based on one of the four strategies above that will yield a brand closely aligned with the new company’s operating strategy. Your merger plan must account for and retain as much of the brand equity each of the formerly independent companies brings to the table. In determining the right strategy, you’ll also need to consider which will yield the best brand to position yourself effectively through traditional marketing channels and emerging ones as well.
Also, examine what internal resources the company may need to support the new brand. For example, is an existing customer relationship management system sufficient, or will it need to be upgraded or replaced? Include the business resources needed for your merger and the steps needed to both obtain and implement them.
You should also develop a migration plan that delineates the role of each brand as you transition to the new one. Use your brand audit to create a list of assets to be updated and to be retired. Ensuring both lists are comprehensive and keeping them updated as you make changes is paramount for a clean transition.
You’ll also need to consider how you will communicate the sunsetting of the old brand to customers and employees. Doing so quickly and without explanation will invite backlash. Instead, consider a gradual transition, where you provide customers and employees with insights into how your new brand is shaping up and why it is the perfect reflection of the two brands they knew and loved.
4. Develop a Brand Name and Identity for the New Entity
Following the strategy you’ve selected, determine what the new brand vision will be, along with the new name and identity. Whether you keep both somewhat separate, fuse them, drop one, or create a new one, make sure that you’ve incorporated what customers perceive as the value in the old brands in the new one.
To do so requires research. You can use existing market research about each company’s brand equity as a starting point. But to maximize your chances of success, conduct fresh research about both company’s brands, and test new brand concepts with focus groups filled with customers of each company.
5. Communicate with Your Customers Along the Way
Your brand merger won’t be effective if the new brand doesn’t resonate with most customers. Let customers participate in the process. Use social media and surveys to ask their perceptions of the two brands and test broad brand concepts and ideas. Create focus groups with long-term customers to workshop draft brand packages as well.
By involving your customers in the process, you build brand engagement from the ground up. And by listening to their perspectives, you’re more likely to build a brand that truly resonates with them.
6. Continue to Manage the Migration Over Time
Ensuring your brand merger is a success requires monitoring over time. Keep a close eye on how old and new customers respond to your brand, and make adjustments as necessary.
This doesn’t mean tweaking your logo after every negative Facebook post or mean Tweet. But it does mean analyzing how most of your consumers feel about your brand at regular intervals, evaluating whether that sentiment has implications for downstream operations, and determining whether and what adjustments should be made.
Tips for a Successful Brand Merger
Brand mergers don’t happen every day, and some marketing professionals may go an entire career without having experienced one. But when they do occur, brand managers and marketing staff have to be ready to take the helm and lead. It’s an awesome responsibility, and if you haven’t been involved in one, perhaps a little scary. Whether you’ve completed one or more before or are a complete newbie to merger branding, following these tips will stand you in good stead.
Understand Your Business’s Financials
You may be in marketing. But understanding the financial and business strategy behind the merger can give you valuable insights into each company’s respective strengths.
Communicate With Your Team Throughout the Process
The importance of communication cannot be overemphasized here. You should be in regular communication, not only with your team but with senior business leadership, key departmental stakeholders, and your customers.
Establish Clear Goals
Marketing plans of all types are often overly broad, containing lofty but not specific goals. And while you and your team may have decided which strategy is appropriate to use, there are many more steps to take to merge brands successfully. Your plan must include clear goals and subgoals, along with tasks and task assignments that will help you achieve them. Otherwise, your efforts are likely to yield a lot of meetings but little progress.
Consider Outside Help
Merging two brands can be a daunting task. And sometimes, in-house marketing teams may not have the experience or bandwidth to lead such an immense and complex undertaking. Though it can be a scary proposition to let an outside firm take the helm, brand managers should not be afraid to ask for help when needed.
Even in the best of circumstances, mergers are challenging. Merger branding is no different. Whatever strategy you choose, you must be prepared to guide customers and staff from the old brands to the new one without sacrificing brand equity along the way. And while you’re working on your company’s brand merger, you’ve got to help execute other aspects of your business’ integration plan, deal with existing and new responsibilities, and find a minute for lunch too.
Whether you have or don’t have the resources to handle a brand merger in-house, an experienced marketing firm like HyFyve can help maximize your chances for success. Schedule a meeting with us today, and let’s discuss your brand vision for your new company.