• by Aaron Baar , October 10, 2017

Rebranding after a company merger and acquisition seems like it should be simple: Determine which company has the strongest equity in the market and move forward with that identity. But a new evaluation by Landor of mergers and acquisitions suggests the reality is much more complicated. 

The brand consultancy looked at the behavior of S&P global 100 companies over the past 10 years. While nearly three-quarters of those companies rebranded an acquired asset within seven years, the rationale behind said rebranding is not necessarily straightforward. 

“There’s a lot more nuance in what people are doing with acquisitions these days,” Louis Sciullo, executive director of financial services at Landor, tells Marketing Daily. “They’re not just slapping an endorsement on something.”

Among the factors determining how a company should go about rebranding after a merger or acquisition is what sector and audience the company serves. Consumer-facing companies are more likely to retain the acquired brand identity (with just under 60% rebranding) as a way to maintain the equity already built up in the market. Companies in the health care, IT, financial services or energy sectors, however, have a higher likelihood of changing an acquired brand. 

The deal’s size is another factor affecting the transition, Sciullo says. Smaller deals (those under $1 billion) are more likely to see a rebrand (happening in 78% of those deals) than those valued at more than $5 billion (which happens only 46% of the time). Highly acquisitive companies (like Alphabet and Microsoft), not surprisingly, are far more likely to rebrand, as well. 

“If you’re buying something that’s relatively inexpensive and you have the market cap, it’s pretty easy to absorb,” Sciullo says. “But if you’re buying something that is about giving you a greater market share, you might not [want to change so quickly]. You want to be careful in what you buy and you want to fully realize the equity of what you bought.”

Regardless, companies looking at mergers and acquisitions would do well to consider early in the process how they want to move forward post-deal, Sciullo says. Understanding the purpose and value of what a new brand brings is key to knowing how to present the combined assets to the market. 

“Typically what happens is, there’s a lot of people validating the balance sheet, but nobody’s evaluating the value of the brand [acquisition],” Sciullo says. “There are principles around it; you can develop a hypothesis so you can know what the action plan is.”

Ideally, this evaluation should take place concurrently with other financial evaluations before the deal is announced, Sciullo says. Bringing in the CMO or others on the marketing team early in the process can help a company better understand how to approach an audience after the deal closes.  

“They’re key contributors, and they should be brought in as early as possible,” he says. “When we’ve seen that happen, it’s gone much smoother.”