Companies pursuing M&A deals nearly always have a strong growth rationale for their potential merger. They may be looking for an expanded market presence, a broader customer base, or a diversified portfolio of products and services. Whatever the reason, relatively few deals truly fulfil those ambitions, particularly in the short term. Indeed, according to EY’s latest Global Capital Confidence Barometer, between 50 and 85 percent of M&A deals will likely fail.
The most cited reason for failure is cultural difference - an element which can only really be discovered after the fact. Organisations can always examine an existing business based on visible financial numbers, assumptions of potential fit, and advisory assistance from the experts, but the reality of bringing two or more businesses together will only become evident when the deal is complete and you have taken the business forward.
M&A risks can never be completely avoided, but they can be mitigated. A key piece of mitigating those risks is getting marketing experts involved early in the process.
When mergers or acquisitions take place, company cultures, employees, and reputations are forced to adapt - and marketers, as the keepers of the brand (and culture!) have an essential role in facilitating a smooth transition when companies join forces.
For a smoother path to M&A success, marketing has two crucial roles:
1. Building (new) brand value
When an acquisition happens, brands evolve, and it’s the job of marketers to make a brand (acquired or acquiring) hold value even when the underlying moving parts are shifting.
But it isn’t an easy task. A poorly planned rebranding campaign can result in a “Frankenstein” brand that dilutes the power of the original firms. Meanwhile, an overly long branding process can result in missed sales and marketing opportunities.
As well as decisive action, and the ability to focus on goals and ambitions, a big part of ensuring enduring brand value is in great communications. The best brands are adept at communicating to customers, stakeholders, staff, and potential employees what a newly formed company stands for and what those who interact with it can expect to find. This takes plenty of work and is more likely to be successful when a marketing department has been involved from the outset.
2. Content Governance
There’s plenty of work to be done to deliver smart, unified, consistent content that reflects the new brand - it's this sense of alignment between two companies that can be the difference between “mess” or “success.” Successful M&A deals need some kind of content governance - an approach that helps organisations move from a fragmented, chaotic approach to content creation, to a framework aligned with corporate strategy that scales to the pace of business.
Content governance provides visibility across all content, helping to identify potential issues, gaps, and challenges - and then eliminate them. This strategic approach helps to make sure that the merged company can produce good quality, engaging content that consistently represents its new brand and culture.
Ultimately, governance brings order to the chaos. It takes its key elements - your goals, priorities, and policies - and turns them into actionable processes and metrics.
While it’s easy to get caught up in the financials of a merger or acquisition, it’s dangerous and short-sighted to do so. Executives looking to achieve M&A growth tend to focus on combined capabilities and operational readiness. However, in their haste to reap the low-hanging fruit of cost benefits, companies may miss opportunities to define a long-term growth strategy centred around building and growing a coherent brand identity and culture.
By Christopher Willis, CMO for Acrolinx
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