Mergers and acquisitions: how to take care of the rebranding

The merger and acquisition (M&A) process can be a great opportunity for two companies to boost their image and the range of services offered. However, there are some key challenges along the way. Dominika Konieczkowska-Kracik, Transformation Lead at Admind, examines how M&A affects both brands and their visual identity to discover key principles that will help you avoid the most common mistakes.

Mergers and acquisitions are actually two different processes. In mergers, two companies of similar size decide to combine their businesses to create a larger and more effective company. In acquisitions, there is a large company that wants to buy a smaller one, maybe a startup. The aim is to expand the buyer’s offer.

In both scenarios, the situation of companies going through the M&A process changes drastically. And you need to be prepared for this shift, both from a technical and branding standpoint. Although there are some technical aspects of this process that we will mention today, let’s focus on the visual side of brand transformation. Let’s see how this affects both brands.

How will M&A affect both brands?

In most cases, the ultimate goal of M&A is to create a new, more powerful market player. And when that goal is met, both brands will get a significant boost.

This process can be beneficial from many perspectives. First, customers get access to a more comprehensive offering without having to switch from one company to another. The smaller brand can improve thanks to the larger partner’s infrastructure and resources, and the buyer expands their offering.

As a rule, the company to be acquired is fully integrated into the company that bought it. And while it usually retains its original logo, all other branding materials are unified. This includes layouts and templates, presentations, advertisements, websites and online shops, printed documents and materials, manuals and legal texts.

As you can see, this is quite a challenging and complex process involving professionals with many different profiles and specializations. We’ll talk a little more about that in a few moments. First, let’s discuss some of the most pressing challenges that need to be addressed during the M&A process.

What challenges do we face along the way?

The fact is, not every merger/acquisition is a big hit. There were situations when the merger of both brands led to a decrease in their original values. One of the most prominent examples of such unsuccessful mergers and acquisitions was the case of Kraft Foods and Heinz.

The company Kraft Heinz

In 2015, food giants Kraft and Heinz agreed on a $63 billion merger that created the world’s third-largest food company. As CNBC reports, under the terms of this deal, Heinz returned to the public market with a 51 percent interest in Kraft. Current holders of Kraft stock received 49% of the company. Two years later, the market capitalization of the combined Kraft Heinz brand was reduced to 50% of its original value. Just six months later, it fell to 30% of its original value.

What were the reasons for this failure? As always, there was more than one obvious reason. First of all, both companies produced food that wasn’t necessarily considered healthy. And with the change in nutritional thinking and the growing importance of ecology and sustainability, customers were simply not enthusiastic about this new food empire. Second, no sufficiently thorough strategy would take into account all aspects of this massive transition. And third, by the company’s own admission, it was “overly optimistic” about the results of this merger. Significantly, Money.com called this new FMCG empire “insane.” And as history has shown, with good reason.

Why can M&A be a failure from a rebranding perspective?

At this point we would like to mention three decisive reasons.

The first is a lack of strategy. M&A is a complex, long-term process. You need to start with thorough research and a comprehensive plan to make it work. A large part of this strategy should be devoted to rebranding.

Second, there is a lack of professional help. By working with a third party who can look at it objectively, you avoid the trap Kraft Heinz fell into – over-optimism. Working with an experienced branding agency will help you analyze the process from many angles. This reduces the probability of failure.

And the last reason can be a lack of priorities. You can’t do everything at once. You need to prioritize different tasks and tasks that need to be done and place them on a transparent and well thought out timeline.

Today we’ve barely scratched the surface of mergers and acquisitions involving rebranding. It would be a challenge to fit this whole subject into just one book, let alone one article. However, if an M&A process is imminent, start with extensive research and strategy. You need to outline the whole process and break it down into specific steps. It will be a good starting point. In the second article we will show you how to avoid problems with M&A. You will also discover all the important principles that govern these complex undertakings.

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