Winning the Brand Game Can Supercharge Your M&A Results
For acquirers of organisations, either Private or business Equity (PE), its not precisely a good time to be buying services and putting bets on new frontiers. A recent Price Waterhouse Coopers report found that the uptick in mega-mergers and acquisitions seen in 2019 will continue into the brand-new years. This suggests high purchase costs will remain in their stratosphere for the foreseeable future.
As an outcome of high purchase-price multiples and overly ambitious earnings growth plans, the landscape is cluttered with the remains of deals gone south or sour. In fact, over half of desired acquisitions fail, and 80 percent fall short of expectations. To safeguard themselves against failed offers, Corporations and PE have actually reacted to inflated purchase cost multiples by doubling down on pre-acquisition and pre-merger due diligence.
While financial engineering of the balance sheet and recognized operational enhancement opportunities (lean, supply chain, and so on) have actually certainly assisted mitigate purchase cost danger, one frontier that has historically been overlooked is marketing– specifically branding. While the reasons for this absence of understanding are different and many, we can share from experience that one reoccurring element continues to contribute in much of the sad M&A stories that we dissect– an absence of a branding method.
Designing and performing an efficient pre-acquisition and/or post-acquisition branding technique– one which records and interacts that brand-new story and increased worth to the market– in our view can make all the distinction in accomplishing M&A success. Trying to find synergies and complementary strengths to produce new or improved worth through branding has now become the favored strategy to win.
The Importance of Brand to Pre and Post-Acquisition Success
An efficient pre-acquisition due diligence brand assessment assists to validate or revoke the acquisition thesis. We often see that it offers a better understanding of the target businesss intangible assets, increasing the accuracy of the company appraisal. Similarly, it determines strength and weakness in locations that might impact income potential.
Managers and analysts involved in M&A activity tend to try to tell the value story by metrics alone. Skilled at operational optimization and finest practices, todays M&An experts tend to take a look at metrics that drive performance, including effectiveness from integrating core functions, and the advancement of a leaner supply chain procedure.
But the story of an effective M&A strategy today can not just be told by metrics alone– the brand name needs to play a crucial role. Consider the barriers dealt with in a current acquisition by eFolder, an IT services company in the handled companies (MSP) space, which stopped working to emphasize brand name in supporting the merger. The resulting confusion consisted of:
Peter has more than 35 years of concrete service building experience, consisting of development, strategy, financial investment, and marketing/operational improvement. His marketing and operational consulting, Private Equity, and M&A experience is spread out across a varied variety of markets and companies. In his role as Vice President, Peter leads the Private Equity organisation advancement activities for Chief Outsiders, assisting create worth for the portfolio business of PE companies throughout their financial investment lifecycle, consisting of pre-acquisition due diligence and post-acquisition assessment and execution
Chad Nelson, Brand Strategist/Creative Director The Basis Group.
The story of an effective M&A plan today can not merely be told by metrics alone– the brand name needs to play an essential role. Frequently overlooked, post-acquisition brand management is unfortunately seen by numerous as an expense. Chad has more than 20 years of innovative experience in modern, B2B marketing, brand advancement and graphic style. In his role as imaginative director, Chad operates and oversees all creative development as corporate branding strategist. He has actually been a trainee of brand name development for many years and played the main function in the advancement of TBGs proprietary branding methodology
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Frequently ignored, post-acquisition brand name management is unfortunately seen by many as an expenditure. For this reason, the symptoms of the ignored or shunned brand name management consist of a failure to ask, or confusion about the answers to, standard questions such as, “Who are we?” and “What are we selling?”
The resulting internal results typically consist of a baffled and anxious work environment, low morale and bad worker retention.
The external impacts of poor post-acquisition brand management develop from broad consumer and market confusion and issues. A loss of brand equity, dropping and defecting consumers enterprise value quickly follow.
Merger Potential Unrealized
2 years post-acquisition, eFolder and Axcient had actually merged on paper just. Each business ran independently under the name eFolder/Axcient, in the same market– but with various target market and opposing business cultures. Some in the market questioned the relocation.
One difficulty the brand-new entity dealt with was that few of the bigger MSP prospects knew eFolder. With fading market self-confidence that the marriage might work, the merged business failed to meet its revenue and share goals.
As we observed here and elsewhere, the combined internal and external results of bad M&A brand management have the possible to stall a business marriage and spoil stellar portfolio performance. Ultimately, they contribute to the high rate of M&A failures.
It need not be so. With an intensive branding effort, combined entities can realize their full capacity. As we will see with eFolder/Axcient, “Rebranding the combined business unlocked considerable value that was not recognized in the initial merger,” mentioned Angus Robertson, Chief Revenue Officer of Axcient.
A Closer Look at M&A Brand Management
Offered the high rate of M&A failures and historical PE playbooks focused on operational and financial optimization, the function of pre and post-acquisition brand name management must be examined. To be sure, every effort must be made to avoid the disastrous internal and external results of poor M&A brand name management.
This post is the very first in a series that will take a better take a look at the impact of unprioritized or inefficient M&A brand management. In future installations, we will more carefully examine internal and external effects to demonstrate why brand name plays a substantial function in raising the M&A success rate and increasing exit evaluation multiples.
Neil Anderson, Partner & & CMO Chief Outsiders
Chad has more than 20 years of creative experience in high-tech, B2B marketing, brand advancement and graphic style. He has actually been a student of brand name development for numerous years and played the main function in the advancement of TBGs exclusive branding methodology
Merged entities running individually
Various target market and sales approaches
Varying item roadmaps
Conflicting corporate cultures
Absence of a single business identity/name for the merged business
Neil is a Chief Outsiders Partner and CMO. With a performance history of executive management and marketing success, he assists early stage start-ups, mid-sized and large, openly traded companies establish and execute comprehensive and integrated marketing techniques to speed up development. Neils holistic method to marketing powers effective marketing plans, increased lead generation and conversions, services and product profits development, and enhancements in corporate performance and profitability
Peter Hlavin, Vice President Business Development Chief Outsiders.