To successfully rebrand after a merger, companies need to adopt a rebranding strategy and use best practices to ensure its success. Examples and best practices for rebranding are outlined below. In addition, your research team has identified several challenges faced by organizations after M&A, using the recent Amazon-Whole Foods merger as an example case.
Rebranding After Merger
- There are four main strategies used to companies to rebrand after a merger or acquisition. Research has found that the majority of companies (55%) use "Backing the Stronger Horse," a strategy in which the weaker organization takes the visual identity of the organization with the stronger brand identity. Other strategies include: 1) "Business as Usual": both brands continue to exist as before the M&A; 2) "Best of Both": the new brand combines the best elements of both brands; and 3) "Different in Kind": an entirely new brand and identity is created for the new company.
- The first step to deciding on a rebranding strategy is to evaluate the old brands. "Even if both companies had strong brands, the two might conflict and send a mixed message to potential customers and clients. Look at each company’s product features, benefits, pricing and distribution channels."
- The merging brands may also need to evaluate their products and services and decide if they will continue to offer all of the same products, or if some are redundant or will need to be eliminated. Once the brands decide which products to sell, the company needs to decide on factors such as pricing and positioning. This will help the new company decide on branding.
- Companies can see rebranding as an opportunity to wipe the slate clean and rethink everything about their brand story. Brands can assess their voice and positioning, revisit customer touch-points, refine their brand experience, and either start a new brand story or amplify the one they already have.
- Brands should be sure to craft a clear message for their target customers. After the merger, brands can either take elements from both of their brand identities to craft their message, or start a new narrative from scratch for their brand voice.
- One successful example of the "Business As Usual" rebranding strategy is L'Oreal, which is now the world's largest beauty company, due in large part to the company's extensive history of acquisitions. One unique aspect of L'Oreal's M&A strategy, however, is that the company does not absorb any of the brands it acquires; rather, it keeps the original brand and prioritizes nurturing and growing that brand. "This ‘buy and grow’ approach has allowed L’Oréal to dominate the beauty world, reaching new consumer groups, securing innovative technologies and accessing niche markets with a growing list of diverse acquisitions."
- In another successful example, the Orange-T-Mobile merger in the UK began with a co-branded "Best of Both" strategy. "Easing consumers and staff into the partnership, the global entities announced their union in a rare joint message which retained and communicated each of the two brand’s recognizable corporate visual identity. This remarkably transparent and candid approach retained and even built on the brand equity each company had built up over the years."
- Orange and T-Mobile gradually transitioned into a "Different In Kind" strategy, creating an entirely new brand for the merged company based around 4G technology and known as EE. "EE succeeded in creating a brand that was new to market thanks to a well thought through brand architecture, built on five long years of carefully planned rebranding strategy to ensure long term stability."
Challenges Faced After M&A
- One challenge faced by merging companies can be the loss of a team mentality and compromises in company culture. Small companies often have a strong sense of teamwork and collaboration, and teams often spend years pouring their heart and soul into building a brand. When a brand is acquired, this can change dramatically. Employees may no longer feel as if they are working together as a team, but rather than they are working for the company owners. This may create dissatisfaction or cause employee turnover.
- Integrating two different companies can be the cause of many challenges after M&A. One challenge can be merging different technologies used by the companies, as well as merging databases, client lists, and other resources. Another challenge can be integrating corporate culture. For example, a small startup likely has a very different pace and way of working than a large, bureaucratic corporation.
- Another major challenge is that redundant positions at the two companies often inevitably result in layoffs and staff reductions. Not only is this bad for company morale, but it can often create fear and resistance among employees. Instead of helping the company transition and integrate, scared employees may just act to protect their own jobs, even if that means resisting integration.
- The Amazon-Whole Foods merger is one example of a transaction that resulted in some major issues. In theory, this merger seemed that it would be beneficial to both companies. However, after the merger took place, it became apparent that there were some differences between the two companies that were not well-aligned.
- Amazon's workplace culture and employee management strategy focused on "tight employee discipline and cost-cutting, productivity-driving strategies." Whole Foods, on the other hand, was known for a more personal touch and for giving management and employees a greater degree of freedom and flexibility.
- Therefore, when Amazon took over Whole Foods, the company tried to force its culture on Whole Foods, which resulted in a huge amount of very public resistance from Whole Foods employees. "Whole Foods employers were reportedly crying on the job and publicly accusing Amazon of turning them into ‘robots’. Workers even began unionizing to protect jobs they felt were under threat. With the conflict between Whole Foods employees and Amazon management playing out across newspaper and web pages, what became strikingly obvious was how detrimental a lack of consideration towards the two very different work cultures had been."
- This example demonstrates the importance of brand values and identities being aligned in M&A, and having a strategy in place to deal with any differences in values or culture.