Navigating Merger Branding Complexities: Strategies and Insights

But, as you might have guessed, the reality is far more complex. What happens to the existing brand identities? How does leadership transition? And dare we ask, does it involve rebranding?

The truth is, no merger or acquisition is complete without a solid branding strategy. Not only does this help you communicate change to relevant shareholders, but it helps you bolster brand equity and ensure that everyone understands your brand value.

Branding plays a crucial role during the acquisition and merger process and, of course, post-merger. While some mergers seamlessly blend, others struggle to find harmony, risking failure. Shockingly, up to 90% of mergers and acquisitions end in disappointment, according to Harvard Business Review.

In this article, we’ll walk you through the challenges of mergers and acquisitions, providing practical business strategies and insights. From aligning cultural differences to unifying visual ide­ntities, we reve­al the keys to successfully combining brands in today’s dynamic marke­t landscape.

What Is Merger Branding?

Merger or acquisition branding (sometimes called M&A activity) ultimately refers to the process of integrating the brands of two companies into a single, cohesive, new identity. This is typically done to leverage the strengths of both companies and create a unified brand image that reflects the combined entity’s values, products and services.

The goal? To ensure consistency and clarity in the marketplace, as well as to communicate the benefits of the merger or acquisition to customers, employees and other key stakeholders.

It should come as no surprise to hear that merger or acquisition branding can look many different ways, depending on factors such as the size of the companies involved, their respective market positions and the industries they operate in.

It may involve retaining the acquiring company’s brand name while incorporating elements of the acquired brand’s communication strategy, creating an entirely new brand identity, or adopting a hybrid approach that combines elements of both brands. More on this later,

The Key Drivers of Mergers and Acquisitions

There’s no one-size-fits-all approach when it comes to merging, and there are many reasons why a company might consider merging or acquiring another brand. Here are a few of the most common:

1. Growth. One of the big reasons companies join forces is to grow bigger, faster. By merging with or acquiring another company, they can instantly increase their size and reach new markets or customer segments.
2. Market share expansion. Sometimes, a company wants to grab a bigger slice of the market pie. By merging with a competitor or acquiring a company that already has a solid market share, they can strengthen their position and become a major player in their industry.
3. Accessing new technology or intellectual property. In today’s tech-driven world, staying ahead of the curve is crucial. Merging with or acquiring a company that has innovative technology or valuable patents can give a company a competitive edge and help them stay relevant in their field.
4. Cost savings. Mergers and acquisitions can also lead to cost savings and synergies. By combining operations, streamlining processes, and eliminating duplicate functions, companies can often reduce expenses and increase efficiency.
5. Diversification. Sometimes, companies want to diversify their offerings or enter new markets to reduce risk. Merging with or acquiring a company in a different industry or geographic region can help them spread out their investments and weather economic downturns more effectively.
6. Talent acquisition. Companies are always on the lookout for top talent. Merging with or acquiring a company that has a skilled workforce can help them quickly boost their team and access specialised expertise.

There are plenty of reasons why companies might choose to merge or acquire another business. It’s all about finding the right fit and seizing the right opportunities for growth and success.

Key Challenges in Merger & Acquisition Branding

When companies unite­ through mergers or acquisitions, it involves much more­ than financial and operational integration. The proce­ss demands blending their distinct brands and ide­ntities.

M&A branding pre­sents a unique set of hurdle­s to overcome. Here­ are some significant challenge­s.

Maintaining brand consistency

Each company likely possesses its own brand value­s, messaging, brand architecture and visual identity. It’s fair to say that consolidating these­ elements into a cohesive brand identity – which reflects the­ merged entity’s ide­ntity without losing either company’s esse­nce – can be difficult.

Cultural differences

No two brands are the same, and companie­s looking to merge, acquire or be acquired often originate from dive­rse backgrounds with distinct corporate identities.

The­se difference­s can lead to clashes in values, work style­s and communication approaches. Bridging these cultural gaps to cre­ate a unified culture for the­ newly merged organisation is e­ssential. Failure to do so can result in e­mployee dissatisfaction, decre­ased productivity and talent loss.

Customer loyalty

Loyal customers of both companie­s may experience­ uncertainty or resistance towards the­ merger. Understandably, they might have­ concerns about changes in product quality, customer se­rvice or the overall brand e­xperience.

Keeping your customer base happy is essential, so be sure to communicate clearly at all stages. Let them know how the changes will benefit them and what they can expect, and reassure them that you will maintain the quality of your products and service­s.

Internal communication

Effective­ internal dialogue is absolutely crucial during merge­rs or acquisitions. Never forget who your biggest asset is: your employees.

In the face of change, your staff may be anxious about job se­curity, roles and duties. Make sure that your employees understand what to expect throughout the process – your objective­s, timelines, and potential staff impacts. Clear communication foste­rs trust and stability – both of which you’ll need in abundance!

Integration of systems and processes

Combining two firms necessitates inte­grating various systems, processes and te­chnologies. This complex task require­s meticulous planning to ensure a se­amless transition. Improper integration can le­ad to operational inefficiencie­s, data inconsistencies, and disruptions in customer se­rvice delivery.

The Options: Five Merger Branding Strategies

When it comes to corporate identity brand architecture strategies for M&A branding decisions, you have five main options to choose from.

Regardless of the initiative you choose, thorough due diligence is essential. This involves carefully considering integration challenges and ensuring alignment of the new venture with your overarching business objectives.

Here we breakdown the five major options.

Keep both brands as they are

You actually have the option to keep both brands just as they are. It’s a simple, cost-effective, and hassle-free approach.

This is a smart move if both brands already have strong recognition and loyal customers. By sticking with what’s familiar, each brand can keep its relationship with customers intact, avoiding any risks to trust or consistency.

However, there are some potential downsides. Keeping both brands might confuse people or water down the message, especially if the brands operate in different markets or offer similar products. Plus, managing two separate brands in the long run can get pricey.

So, while sticking with the status quo might seem like the easy choice at first, it’s important to think about the bigger picture. Whether it’s the right move depends on the unique circumstances of the companies involved.

Blend the two brands

Brand A  + B = C.

You guessed it, in this option, the acquirer and acquired brand merge to form a single new brand identity. Just consider how Bell Atlantic and GTE merged to create Verizon, a newly integrated brand for the mobile world.

It involves integrating brand elements – such as logos, names and visual elements – to create a new cohesive identity which reflects the identity – and most importantly, the strengths – of both brands.

It’s a delicate balancing act, and it’s important to carefully consider the pros and cons of both brands. You’re aiming to leverage the best aspects of each brands so, it’s vital to understand what works and what doesn’t.

A notable be­nefit is the potential to capitalise­ on both brands’ strengths, fostering brand recognition and custome­r loyalty. This can lead to increased marke­t share and profitability. However, it can be risky and could cause customer confusion or dilution of the original brands’ image­ and reputation.

Keep the stronger brand

You can choose to back the stronger horse and remove the other brand altogether.

First, you’d need to determine which brand is stronger – and why. Is it a legacy brand with an impeccable reputation? Does it have a more loyal customer base. Or does it simply have a stronger reputation?

Ultimately, this approach sees a stronger company absorb a weaker one, allowing both companies to leverage the stronger brand’s reputation. This ‘upgrade’ can generate huge excitement amongst both customers and employees, who will be excited d to see their brand’s reputation improve.

Not only can this approach increase the perceived value or the weaker company’s products and services, but allows the stronger – more dominant – company to expand its brand reach, venture into new markets or simply just grow.

However, it’s important to acknowledge potential drawbacks. This method risks fostering a winner/loser dynamic between the two organisations, leading to friction during the transition and potentially dampening employee morale.

There may be backlash over the loss of the other company’s identity, whether from the media, customers, or employees.

Create a completely new brand

Of course, you do have the option to create an entirely new brand – a new company image, a new logo and a new name – for your recently merged companies.

This could have some connection to your previous brand identities, or it could be a clean state, a fresh start. It’s up to you whether you want there to be an identifiable connection to your newly integrated companies.

An entirely new brand can signal a fresh start for your business. Not only does it allow you to distance yourself from any negative associations, but can provide a great opportunity to merge your two company cultures and values into a cohesive brand identity.

It also provides a unique opportunity to unify all employees under a new collective identity, allowing you to consolidate your brand identity from within. With this in mind, it’s absolutely essential to ensure that your employees understand – and identify with – your new corporate brand identity in order to understand, buy into and effectively communicate it.

That being said, creating a new entity does mean that you run the risk of losing all of the hard-earned brand equity, recognition and recall you’ve earned over the years. You don’t need us to tell you that creating a new brand and building brand awareness from the group up can be both costly and time-consuming.

Introduce a parent brand

Where to begin with introducing a parent brand? Sometimes companies opt to introduce a new parent brand above the existing brands. This allows the brands to maintain their separate identities as sub brands while collectivising them under one group or parent brand.

A key advantage of this approach is that it allows for a clear, overarching value proposition and message. Ultimately, by keeping their original brands, both companies can leverage their established brand equity and customer loyalty.

That being said, one possible drawback to consider is the fact that it can be difficult to maintain a unified and consistent brand identity across multiple brand categories or sub brands. This in turn runs the risk of diluting or undermining the parent brand’s messaging and confusing customers.

Ultimately, managing multiple brands under a singular parent company can be both costly and time consuming.

Want To Talk Mergers or Acquisitions?

Mergers and acquisitions can bring in fresh capital, new opportunities, customers, and success for businesses. But let’s face it, they can be risky. They often mean big changes for the companies involved.

Having a strong brand can help lessen these risks. It gives both customers and employees a sense of stability and consistency. By crafting a solid brand identity that reflects the best of both companies, and carefully considering your brand positioning, you can show everyone that the business is on solid ground and that the merger is a good move.

Sometimes, you just need an outsider’s perspective. That’s where we come in. If you’re struggling with your post-merger brand strategy, reach out. We’ve helped companies of all sizes through mergers and know how to come out stronger on the other side.

Let’s talk!