Looking beyond the deal
Whilst headwinds from the global pandemic remain, M&A activity has shown a remarkable recovery, with global deal volume soaring and an increase in mega deals in various sectors, particularly in those relating to technology and finance.
Deal values jumped by 48% in Q1 2021, compared to the previous year, with a total transaction value of $878bn announced during the period according to GlobalData. Despite the pandemic, 2021 is on a path to be a landmark year, with pharma and technology deals leading the growth trend.
The pandemic has triggered a shift in business models and an imperative for scale and ever greater efficiencies, not least due to the renewed urgency around sustainability impacts around the world. This is making M&A activity more important than ever for organisations looking to meet growth targets and compete in today's rapidly evolving corporate and commercial environments.
What hasn’t changed is the focus on the deal, rather than its ultimate outcome. Most M&As still fail to meet their initial expectations.
Studies cited in the Harvard Business Review put the M&A deal failure rate between 70% to 90%. For many dealmakers, the deal is invariably the end rather than the means and recent research suggests that a lack of time and consideration for the brands involved could be a key factor in this failure rate.
Brand (and the meaning and behaviours it encapsulates) is an increasingly important asset, which is key to the success of any business, reflecting the values of the business and its overall direction. It matters more than ever when it comes to attracting and retaining the best talent, establishing and growing company culture, winning over investors and standing out in the minds of customers. It is far more than a logo and a name.
This is the focus of the Deloitte report, ‘Integrating Brands – a guide to brand management in M&A’, which provides a framework to understand the potential impacts of differing approaches to brand in Mergers & Acquisitions across various sectors and focuses on the key importance of defining these outcomes throughout every stage of the deal process.
Supporting Deloitte’s framework, FutureBrand’s Global CEO Nick Sykes and Global Chief Strategy Officer Jon Tipple contributed to the report, providing their opinions on the key importance and role of branding throughout the merger planning, deal execution and wider strategy.
Drawing on FutureBrand’s deep experience of leading the brand integration strategy for global mergers, Jon Tipple explains how there can be a tendency within the industry to only consider branding post deal:
"In the high-octane context of getting a deal done, it is understandable that brand can often be forgotten or only lightly considered. This may be due to a tendency to view brand as ephemeral, or limited to purely external elements such as names and logos. If the deal is a means to a positive and profitable end, then so too are the brands in question."
Jon Tipple Chief Strategy Officer, FutureBrand
Situating branding and brand strategy at the heart of a merger or integration plan is a key driver of success, both for the deal itself and for the wider performance of the business. FutureBrand’s Global CEO, Nick Sykes comments:
"Brands are instrumental in shaping culture, coordinating organisational behaviour and bonding employees, as well as in signifying change publicly. They play a crucial role in the ultimate deal outcome. It is reasonable to suggest that managers who attend to the brand question at the time of the deal can expect to maximise their chances of medium and long-term success."
Nick Sykes Global CEO, FutureBrand
FutureBrand has a long track record leading the brand definition for global mergers. Key work includes supporting Private Equity group KKR’s with the integration of Japan’s Calsonic Kansei, and Italy’s Magnetti Marelli to build one of the world’s largest car parts manufacturers, uniting under one new worldwide brand as part of the combined company’s strategy to compete on a global scale.
Following the merger of French Insurer Natixis’ and La Banque Postale’s fixed-income and asset management businesses, into Ostrum AM, creating a pioneer and one of the top 10 biggest asset managers in Europe with over 400 Billion Euros under management, FutureBrand was engaged to lead the rebranding of the single entity, including the definition of brand strategy and the brand purpose, bringing together the combined business under a single unified visual, verbal and sound identity.