May 21, 2014

Post merger integration teams need to include rebranding specialists

Post merger integration (PMI) teams are on my mind because the AT&T – Directv merger just hit the news. Back in 2007, when AT&T acquired Bell South, our role during that post merger integration was brand implementation. AT&T’s acquisition strategy was clear. The Bell South merger allowed AT&T to acquire Cingular Wireless, giving AT&T a strong position in the wireless industry. During that merger, because brand implementation was part of the post merger integration strategy, the rebranding process went smoothly.

Typically, post merger integration teams include outside resources from the financial services field to help the two companies combine their systems, processes, and infrastructure to increase ROI from the merger or acquisition. The work begins during the due diligence phase when firms help clients identify and assess target companies, often focusing on leveraging synergies and reducing risk. More and more experts are suggesting that branding be incorporated with other post merger integration work.

Since increased profitability is a driving force behind mergers and acquisitions, customer loyalty and satisfaction need to be addressed during the due diligence phase. How loyal are customers to each of the brands? Will current customers flee to competitors if they dislike the other brand? Consequently, maintaining or increasing brand equity should be looked at during the due diligence phase to make post merger integration easier.

Brand implementation experts can assess the readiness of the target company for rebranding and create an effective brand implementation plan. For example, does the company being acquired have a current database of all of the places its brand identity appears – vehicles, signs, etc.? It’s hard to develop a realistic budget for brand implementation when too many variables are unknown, which can lead to post merger integration costs being underestimated.

Many PMI experts are now suggesting the rule of thumb budgeting numbers be increased from 10% of the transaction cost to 15%. For those of us on the branding side of post merger integration, this is not a surprise since we often find preliminary budgets are driven by historical data instead of up-to-date information about all the visual elements to be converted. Typically, we see an error rate of 10% to 20% in the data we receive from clients about their branded touchpoints. Imagine showing up to rebrand 1,000 vehicles, only to discover 200 of them were retired, out of service, or moved to another location. What a waste of the acquiring company’s time and money! Using a more detailed approach upfront can help post merger integration teams create more accurate budgets.

Having a brand implementation plan incorporated into post merger integration also allows branding and marketing strategy messages to be delivered to target audiences sooner. This keeps customers in the loop, and helps build brand loyalty. So the next time you are assembling a team for post merger integration, make sure to call in brand implementation experts.