Does Branding add Merger and Acquisition Value?

October 6, 2009 at 3:47 pm Leave a comment

By Mike Kolbrener

Identifying brand assets and building their value is crucial before, during and after mergers and acquisitions.

In almost any industry, we have seen firsthand that branding and marketing of a target company directly impacts the success of M&A deals. And that timing is essential.

Enhance Brand Value Before M&A

If you plan to sell your business, don’t underestimate the impact of brand value on the final selling price—because acquirers don’t.
Your brand is among your most important assets. An Interbrand/JP Morgan study found that brands account for over one third of company book value.* Another expert asserts that, on average, a corporate brand accounts for 8.5% of a company’s market cap.2**
After selecting an M&A advisor to sell your business, you typically have 60 to 90 days to get your house in order before evaluation by private equity firms and acquirers. During this period, an expert branding partner should quickly identify your key attributes, and, working seamlessly with your investment banker or M&A advisor, implement the branding and marketing improvements that will most effectively increase your company’s selling value.

Integrate Brands After M&A

Mergers and acquisitions create unique opportunities: expanded offerings, new markets, economies of scale, better competitive outlook, and more. But studies suggest that up to 70 percent of acquisitions fail to deliver long-term value for the acquirer. If not addressed promptly, post-M&A brand issues—market resistance to a brand shift, brand confusion, incompatible marketing and sales process, negative perceptions of a deal among customers or employees—can form a “black hole” for a deal’s value.
You’ll need to quickly assess affected brands or brand extensions and target markets, then devise and begin implementing a value-building brand integration strategy in the critical first 60 to 90 days after a deal. Taking these steps will help you maximize long-term brand value while avoiding the marketing missteps that cause so many deals to fall short of expectations.

* Brand Valuation: The financial value of brands (April 27, 04), Interbrand

** Speaking in Numbers, the Language of Bottom Line Business, David Stewart, University of Southern California (February 7, 2006), A panel discussion presented to the IIR 9th Annual Conference on Returning Marketing Investment

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Entry filed under: Brand Marketing, Branding. Tags: , , .

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