Maintaining Brand Equity and Integration Through M&A

What is brand equity and how do you maintain it through the complex world of M&A? REQ’s newly appointed President, Elizabeth Shea, has navigated that transition through several acquisitions throughout her career, giving her a unique perspective. In May, Elizabeth joined a panel at the B2B MarCom Summit to provide her keys to ensuring a smooth transition through M&A and maintaining brand equity. With her valuable insights, we’ve compiled some takeaways to share.

Brand Equity and Why It Matters For M&A

Brand equity represents the value added to a company through its branding and brand reputation. For example, a customer at the grocery store may opt for a name-brand product over a cheaper generic version due to brand recognition and familiarity. This principle not only applies to the average consumer but also plays a crucial role in the M&A world.

For a company looking to get acquired, branding becomes a way for it to sell itself and make a strong impression that attracts buyers. Traditionally buyers fall into two categories: strategic buyers and financial buyers. A financial buyer is looking at a company based on profitability or growth potential in hopes to raise the value for future investments or acquisitions, whereas a strategic buyer is typically aiming to widen their own platform, improve services, or eliminate competition.

Having strong brand equity can draw a potential acquirer towards a company, regardless of buyer type. When presenting to a strategic buyer, highlighting a good cultural fit and aligned messaging will make a company more attractive as an acquisition target. In the case of a financial buyer, positive brand equity correlates with potential future profits. In both cases, the acquiree makes itself more attractive to buyers and could potentially improve its valuation. 

A Seat at the Table: Why Marketers Belong in the M&A Conversation:

Although often overlooked in the number-heavy discussions leading up to a deal, a marketer's ability to shape a brand's identity and perception is crucial to maximizing value and ensuring a smooth transition. 
Having a marketer present in these discussions will provide these pivotal insights:

• Understanding the Buyer: As much as the acquirer has to look into the acquiree, any company that is looking to be bought should be analyzing its potential buyer. This is an audience that could require its own marketing or communications strategy. Including a marketing lead in these discussions will pay dividends in the long run. 
• Shaping the Narrative: Marketers can create compelling and directed narratives about their company (e.g. innovative and award-winning technology, expert workforce, or deep customer base), which can speak to the wish list of a potential acquirer. 
• Post-Acquisition Integration: One of the toughest parts of integrating two or more companies is figuring out how to manage the shuffling of multiple established brands. Marketers provide a perspective that goes beyond the numbers and can prevent or smooth out any kinks that come up while integrating those brands.

While it’s true that numbers are the driver of most M&A deals, those numbers can lose their value if there is misalignment of vision and branding. Giving a marketer a seat at the table is one simple action that can prevent that misalignment.

Preparing For a Deal: Proactive Brand Management for M&A

The role of brand equity and marketing in M&A begins far before any discussions of a deal. A company can make itself compelling at first glance by always keeping the possibility of an acquisition in mind, which starts with the company website. Making sure to highlight achievements and client success stories on the website is a simple but effective way to make a strong initial impression. On that front, making a push for awards, recognition, and client testimonials solidifies those achievements and helps companies to stand out.

Companies interested in being acquired should also keep an eye on their Glassdoor profile. Companies do not want to ignore their employee experience as they head into discussions with a potential acquirer. 

The Power of Transparency: Setting the Stage for Employee Buy-In

For employees, the process of being acquired or merging can often feel overwhelming. Employees sometimes feel blindsided by vague communications and role confusion. With strategic and well-timed messaging, this can actually be a very exciting time for employees, filled with optimism about new opportunities. 

By implementing a few key strategies, your employees will have a positive outlook through a deal:

• Be as transparent as possible as early as possible. Giving employees time to start envisioning the changes and get familiar with the new brand will make the transition feel natural by the time it comes around. 
• Answer the question, “What does this mean for me?” As a deal finalizes and details get ironed out, find a way to directly communicate the answers to that question. Highlighting opportunities for greater career growth and new skills helps paint incoming changes as extremely positive.
• Use branded swag to build a sense of community and grow pride in the company. Adjusting to being under a new brand can be difficult, but giving employees high-quality gear to wear and use can accelerate that process. 

Transparency will help create positive feelings about the merger and will help ensure both employees and the acquiring company are happy and comfortable with the new situation.

The Bottom Line: Brand Equity and Marketers are M&A Assets

In the modern M&A landscape, companies are increasingly recognizing the value of brand equity. Strong brand equity can attract potential buyers, command higher valuations, and ease post-acquisition integration. Marketers, with their deep understanding of brand perception and customer insights, can play a crucial role in navigating the M&A process and ensuring a smooth transition. 

Elizabeth Shea’s informative thoughts on brand equity and marketing through M&A come from years of first-hand experience and unmatched knowledge of the industry. Read more from Elizabeth and the whole REQ team here.