Merger mania heats up

The banking crisis put a major damper on merger and acquisition activity. But cheap debt, plenty of cash in the corporate coffers and a rising stock market are all fueling a pickup in mergers. Some on Wall Street believe this will be the biggest year ever for M&A.

Does this mean you should be considering the acquisition of another company, or is it time to put your own firm on the block? Either way, if you move forward with a merger it will have a major impact your brand.

Brands are often the last thing CEOs consider when they merge their company. Unfortunately, many executives learn how important the brand is after they close the deal and start the process of putting the operations together.

Corporate mergers can often destroy corporate reputations that took years to build. When mergers fail to live up to expectations, everyone suffers — shareholders of course, but also employees, customers, vendors and everyone associated with the merged companies. That is a key reason why careful consideration should be given to the anticipated brand strategy before any merger is concluded.

Brand strategy from an M&A perspective:

How will the merger impact your employees?
Mergers typically create confusion, conflict, fear, anger and uncertainty among employees. This leads to talent raiding, and often competitors are able to scoop up good people who are worried about their futures just when distracted executives need them the most.

How will the companies be integrated?
The integrations process, or lack thereof, is often blamed for merger failures. A thoughtful vision, values and mission statement for the newly combined entity will go a long way to set the tone for the merger. This is something that can be done as part of the merger process rather than waiting for the ink to dry.

What will the combined companies be called?
Harried executives often consider the name of the company as an afterthought, or with so much emotion that it evades logical thinking. The corporate brand is an important asset and naming should be put on the negotiation table early in the merger process. An outside brand-consulting firm with brand valuation capabilities can come up with alternative scenarios with the best naming recommendations and the potential value of each. My firm was consulted when SBC acquired AT&T. Management naturally wanted SBC to be the new corporate name, but we concluded it would take billions of media dollars to elevate the SBC brand to the size and stature of the AT&T brand. CEO Ed Whitacre wisely chose the AT&T name for the combined entity.

Exploit the initial interest in the merger.
When you are ready to announce the merger, make sure you are ready to exploit the initial interest in the newly formed company. There will never be a better chance to tell your story than in the initial 30 days — after that the merger is old news. Have your senior spokespeople trained on the media. Have your ad campaign and communications materials ready for release. Talk to the press. Be ready to announce to your investors. Make the most of your announcement.

Don't forget both sides of the acquisition.
The time to set a budget for announcing and integrating the newly merged entities is before the deal is concluded. This aspect of brand building is cost effective for protecting existing brand equity and building the merged brand. Unfortunately, budgets are usually set after the deal is concluded. At that point all the pressure is on cutting costs. Damage to the brand can be catastrophic if it is not properly funded immediately following a merger.

Merge the cultures.
You are not only merging the businesses but the cultures as well. Often this is the most difficult aspect of a merger. Communicate with consistency, communicate often and communicate like you mean it. Tell your employees what kind of culture you are tying to build and how you expect them to behave. Get your employees involved in thinking about the new company with well-crafted purposeful brand workshops designed to create internal buy-in. Keeping your employees well informed about the merger and what to expect will help rebuild trust.

Communications is your best tool launching your merged brand.
Spend more time and resources than you think will be required to make the merger convincing. Utilize every communications vehicle to create excitement. It will take time but communicating your new brand will pay big dividends.

There are still plenty of global economic headwinds that could quickly chill M&A activity. If any of the global markets have a significant meltdown it will likely domino and quickly chill the heated M&A markets. But, if you are looking for a merger this could be the best opportunity in years to execute your plan.

James R. Gregory is chairman of Tenet Partners, a brand innovation and marketing consultant. He has written four books on creating value with brands. Contact him directly at (203) 979-7914 or [email protected]