Brands and M&A

The weekend WSJ had an interesting piece on brands, marketing and M&A. The authors suggest that a significant blind spot exists in many deals where all the emphasis is on the hard numbers and not enough attention paid to less tangible items such as, "corporate reputation, goodwill and the brand itself."

The following steps are suggested to remedy this:

Selling the Brand. First, a marketer would
explicitly consider how the company can communicate the benefits of the
merger to customers, employees and investors — and win their support
by making them feel like active agents in the deal rather than passive
participants. A marketer would also ensure that the new entity’s
corporate brand is chosen based on strategy rather than expediency.

Finding Key Assets. Typically, the pre-merger
discovery process limits itself to verifying the potential of hard
assets such as property, equipment, patents and drilling rights. A
marketer would also look at "relational" assets that drive cash flow,
such as corporate reputation, goodwill and the brand itself — vitally
important factors that often get overlooked in a merger deal.

Looking Beyond Deal Breakers. Similarly,
due-diligence teams largely look for "deal breakers" that could prevent
a deal from closing. But a senior marketer would also look for "deal
makers" — factors that will enhance the chances of success after the
merger, such as the strategic use of the corporate brand. The marketer
would focus attention on ways in which the new company could deliver
more value to customers, for instance, instead of focusing on how it
could cut internal costs.

Wall Street Journal

(Contributed by Colin Nagy)