The importance of preserving brand equity during mergers and acquisitions - Studio Science Search for: Work About Blog White Paper Careers Contact Search Chris Belli The importance of preserving brand equity during mergers and acquisitions Artwork by: Lorena Lane Last year I wrote about the increased importance of going big on brand in response to the disruption we were all experiencing. As we emerge from a life-changing year, I want to address the uptick in mergers and acquisitions I’m anticipating in our post-pandemic world (I’m not the only one), and how to make sure your brand comes out on top should you find yourself undergoing a merger. It may seem like I’m stating the obvious when I say that it’s important to maintain and preserve brand equity during any merger or acquisition, but you’d be surprised how many times I’ve seen internal stakeholders think they know where their brand stands with customers when they couldn’t be any further off base. Let me be direct, sometimes those closest to a brand don’t actually know what’s best for it or what their customers actually want. “Study after study puts the failure rate of mergers somewhere between 70-90%. More often than not, brand is not promoted or leveraged to provide unity, clarity, and solidarity during this critical inflection point, yet brand can make all the difference between success and failure for the companies involved.” – Harvard Business Review There is a lot that goes into finalizing any merger or acquisition and it can be tempting to let the branding component fall by the wayside, and/or assume you know the best path to take based on your own assumptions. This is where I urge and encourage you to proceed with caution. I’ve witnessed many organizations make poor decisions based on internal assumptions of their own brand equity. And according to the statistics I shared above from Harvard, it’s a pretty common occurrence. So how do you make sure you don’t fall into that trap and become another failed statistic? Before you do anything, stakeholders must establish how much brand equity you have, and you can’t do this without qualitative research. This is what differentiates Studio Science from other agencies, and I’m not just saying that because I work here and am wildly biased. Everything we do comes from a customer-focused approach. By using human-centered research and insights, we’re able to understand what your customers think and establish opportunities for you in the process. I hate to say it, but oftentimes internal stakeholders don’t understand their own unique value proposition. We help you establish and articulate your unique value proposition based on the pain points that you are solving for your customers, and you can only do that by gaining insights from those customers. “A merger’s success relies in part on preserving positive feelings among customers and employees. It’s smart to pursue a branding strategy that explicitly seeks to transfer equity from both merging companies to the new one. This is true even though fusing two companies’ identities may be cumbersome and expensive.” – Harvard Business Review When Zix acquired AppRiver, they came to us to help them create a cohesive brand strategy in light of this new acquisition. The very first thing we did was visit both companies’ offices to do a deep dive into better understanding their personalities, by speaking with both their employees and their clients. What we learned in these initial conversations are what informed our approach to creating a comprehensive brand strategy that maintained customer trust and brand equity. As a result of our work together, Zix and Appriver positioned themselves for continued growth within the industry’s fastest-growing segment. While you can learn more about that specific merger in the case study I’ve linked above, as a reference point (and for the sake of transparency) here’s a simplified overview of the process we undergo with any of our clients’ branding, whether they’re starting from scratch or navigating the delicate process of merging with an existing brand: Phase 1 – Market intelligence: This is where the research I mentioned above happens, in order to better understand the perspectives of internal stakeholders, the needs of buyers/customers, and the shared values for end users (your customer’s customers). It’s here that we start to identify initial opportunities for brand differentiation. Phase 2 – Brand position in market & value propositions: Taking those insights from the research we are able to articulate a strategic brand position and brand value propositions. These decisions represent the foundation of the brand’s differentiation in the marketplace. Phase 3 – Brand name architecture: Armed with insights gained from Phase 1 we are then able to provide a consultative recommendation for the go-forward brand name. The goal of the recommendation will be to catalyze the equity of the legacy brands as well as to support the unifying theme and compelling brand story. I’d be remiss not to mention that there are a variety of approaches to take when it comes to branding for any new merger or acquisition. In the Zix scenario, that’s what we call a fusion of brands. But everyone’s needs and situations are different and based on informed research (again, that we perform for you), you could go a multitude of directions based on what’s right for you in order to maintain the best brand equity. Here are a few of the most common examples of integration strategies, including the respective percentage by which they’re typically utilized: Stronger Horse (55%): One organization takes the visual identity of the other, which has the stronger brand. No Change (24%): both brands continue to exist independently. Fusion (13%): the new organizations combine the visual identity of the both companies. New Brand (8%): an entirely new corporate identity is created for the organization. In some cases, there are variables at play that can impact if/when you should consider rebranding that don’t fall under what I’ve discussed above in relation to mergers and acquisitions. For instance, your brand may have outgrown its original intent (Dunkin Donuts – Dunkin), it’s received bad press or negative customer sentiment as a result of a rebrand attempt (Overstock.com – O.co – Overstock.com), or it embodies insensitive racial or cultural depictions (Aunt Jemima – Pearl Milling Company). But that’s a can of worms I’ll open another day. Chris Belli VP, Marketing & Business Development Chris serves as Vice President of Marketing and Business Development overseeing the strategic marketing of Studio Science as well as all sales activities. 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