A merger is a unique opportunity to reimagine your business and brand. But the reality is stark: 70%-90% of mergers and acquisitions fall short of expectations. Prophet’s approach to M&A not only ensures that brand equity isn’t degraded but creates a new platform for growth through the development of a relentlessly relevant brand. This demand-driven approach is complimentary to driving efficiency of costs post-merger.
Relevance is the most reliable indicator of a brand’s long-term success. In fact, data from our latest Prophet Brand Relevance Index™ reveals that revenue growth of the most relevant brands have outperformed the S&P 500 average by 12% over the last decade on profitable growth.
It’s important to understand how to navigate this process, and mitigate the pitfalls that can derail or sub-optimize an M&A effort. This article will illustrate the key areas to focus on, and the opportunities and risks your business is likely to encounter.
The following potential pitfalls can be navigated if anticipated and addressed with a proper strategy:
- Inadequate alignment with business strategy – Brand strategy must be informed by business strategy and designed to support strategic objectives and intent.
- Too narrowly framing the merger as a “re-branding” effort – Mergers present a rare point-in-time opportunity to drive broader cultural and experiential change for a new brand or company.
- Minimal internal orientation and focus – Successfully informing, engaging and enabling employees BEFORE launching externally is critical.
- Approaching launch as a “one and done” effort – The initial launch is really only the beginning of creating a meaningful brand that is understood by consumers and valued by stakeholders.
- Lack of coordination, integration and cohesion – Centralized planning and rigorous program management are essential to ensure success across numerous, concurrent efforts.
After all, a successful merger is defined by the value it creates in the marketplace. Effective business and brand integration goes beyond eliminating redundancies, merging teams and unveiling a new name and logo. While short-term profits can be achieved through efficiencies and cost reductions, long-term shareholder value is created through a deep understanding of customers and the power of the brand.
Developing relevant offerings that appeal to your customers will accelerate top-line growth. Additionally, creating a relentlessly relevant brand will inspire, influence and compel consumer behavior.
4 Key Areas to Prioritize for Brand Growth
Over decades of M&A work, Prophet has identified four key areas a company should prioritize to power M&A growth:
- Create a compelling “how-to-win plan.” This plan builds a comprehensive portfolio of company moves and customer-facing offers and experiences that deliver on unmet or underserved needs.
- Develop a transformative brand purpose. Building a powerful brand purpose and narrative can unify a company and establish an aspirational north star.
- Establish a motivating employee value proposition. This drives growth by engaging and inspiring employees to achieve their full potential and increasing the acquisition and retention of talent.
- Prepare to activate your brand. Ensure that your brand’s external activation shapes perceptions, changes behaviors and drives business impact.
CONSISTENCY WITH CLOSE. To successfully integrate two companies, the M&A plan for your business and brand to win in the market must be done well and done early. It’s important to guide the newly merged company’s actions towards customers, shareholders, employees and partners not just for the duration of the merger but for many years into the future.