Mergers and Acquisitions: Marriage of the Brand-Kind
If anything has
experienced an all-time bashing; it is the relationship called marriage. The experts say that couples expend so much
money and energy on conducting the wedding ceremony and forget that the marriage itself is the
most important asset.
Marriage is often
plagued by unmet and unfulfilled needs on the part of the parties involved and
this in the long run affects all those who
have a stake in the marriage and may in the end lead to divorce and dysfunctional families.
Now, let us take the
marriage to the level of corporate brands. We have witnessed a number of acquisitions and mergers in the
Nigerian business scene in recent times; and we are bound to witness even more given
the economic climate.
And when a merger or acquisition occurs, as it does in many of the cases in the banking
sector, it leaves customers and other stakeholders worried about the status of
their investment; uncertain about the outcomes of the merger or acquisition
and generally unsatisfied about the way issues have been communicated .
Let’s take the case
of Mr. Dada who appears one morning at a branch of his bank where a relationship of trust and courteous
and responsive service has been built
for maybe a decade or more and is
greeted by a sign on a huge banner which says: “We have moved to ……” or worse
still the sign may bear another identity
entirely – the name of the bank that has acquired his own.
Well, Mr. Dada is not
so surprised because he has heard that his bank has been acquired by another;
but in fairness to him, he did not receive any pre-warning about the decision
to shut down the branch he was so used to. At the worst he had expected a
change of name; not an outright closure.
In good faith, Mr.
Dada picks another taxi and takes a ride to the new location where supposedly
his bank and money has been relocated to; sure enough, the name of the bank has
changed. He walks into the banking hall and is faced by a myriad of unfamiliar
faces. He cannot locate a single known staffer from his former bank. His heart
sinks.
Nevertheless, he
takes a deep breath and walks into the
banking hall. He finds that while he has been told that his bank relocated,
that was not the case at all. He surveys
the unfamiliar bank’s service counter
and sees two queues; one with one or two customers and the other with a long
row of customers who are noticeably
dissatisfied. Naturally, he makes a move to join the shorter queue. When
it is his turn to be attended to, he is told that he must join the long queue
because that is the queue for those who
hold an account with his acquired bank.
Mr. Dada protests
loudly, “But outside, we have the name of only one bank; why are there separate
queues inside?” He is told to join the
other queue and he is offered no explanations. He joins the very long queue that is being attended by a
bank staff who appears rather disgruntled and uninterested in the plight of the
long queue of bodies standing in line before him.
After a series of negative
brand experiences, Mr. Dada made the decision to take his money elsewhere.
The Lessons? Like any
other marriage – one of the parties (usually the female) may need to lose her
maiden name and take up the husband’s surname. In regards to brands, strategic
thinking has to go into this naming ceremony – which of the two corporate
brands attracts the greater equity or
which name brings greater equity to the corporate goals/ objectives underlying
the merger or acquisition? What brand
promise is the merger/acquisition offering and how can the naming support this?
In some cases, parties
involved have opted for a compound
(hyphenated) name – just as some couples in
a marriage situation may decide
to do.
But beyond the name that the couple chooses to bear, for the marriage to
succeed, understanding the cultures
that both parties bring to the union must be a priority; especially with regard
to leveraging those aspects of both cultures that ensure continuance of favorable brand experiences and outcomes. It
is not enough for the acquirer to swallow up the other in such a way that even the brand equity of
the acquired party is completely
obliterated. This would constitute a huge loss to the marriage alliance.
These are issues that
need to be resolved long before the merger or acquisition is made public. Just
as in the marriage situation, couples do not consummate their union in public.
Rather, this is done in the secrecy of the bedroom. The public only sees the pleasant outcomes;
the fruit of the union – the pregnant wife and eventually, a bouncing baby boy
or girl!
What are the inherent strengths (in terms of brand/product equity) of the parties to the marriage that must be harnessed? What are the weaknesses that must be
addressed? What strategies would need to
be employed to ensure that
customers are not adversely
affected by the complex processes
that the
merger/acquisition would
involve? How can these processes be
handled in such a way that customers are not turned away?
According to
Jeff Swystun, director of global communications for DDB
Worldwide:
<http://www.brandchannel.com/brand_speak.asp?bs_id=21> “The greatest flaw of many mergers and acquisitions is
in not recognizing where the true value lies in the transaction”. He notes further that: “Shutting down a
redundant facility and purging a percentage of the payroll should not be the
prime focus. Investment in the brand must come first to ensure revenue
enhancement.”
Key issues to consider in a
merger or acquisition are: The brand’s definition (what it promises); its
culture (how the brand’s previous owner honored the brand promise); its infrastructure
(how the brand is supported by distribution, marketing, promotion, advertising,
and sales); and the visual aspects of the brand expressed by the name and uses
of the identity, advises Swystun. He
warns that “If any of these elements change during integration, so will the
brand’s equity.”
Finally, one of the
biggest problems a marriage can face is
when the two people involved refuse to
communicate; they refuse to communicate with each other; they refuse to
communicate the problem with family and friends and they won’t even talk to a
marriage counselor. Likewise, communication
plays a key role in determining the success or otherwise of a
merger/acquisition relationship. Communication must be strategic, stakeholder responsive and painstakingly planned and deployed to preempt
and solve the problems that will arise.
First published in PRaxis
