How to navigate a rebrand for a merger of equals

How to navigate a rebrand for a merger of equals

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Thursday, April 9, 2020 | Melissa McPherson

When two similarly sized companies come together in a “merger of equals,” the process of rebranding may take on an interesting — and challenging — twist. Unlike an M&A in which an obvious “parent” company calls the shots, the two entities in a merger of equals must find a way to knit themselves together—even without the benefit of a clear leader. To make matters more complicated, they must sometimes plan for the rebrand under a veil of secrecy, without knowing the full details of one another’s operations.

At BrandActive, we help organizations navigate this unusual situation and chart a course toward a seamless and successful rebrand.

What is a merger of equals?

merger of equals is when two firms of about the same size come together to form a single new company. Shareholders from both firms surrender their shares and receive securities issued by the new company in a merger of equals. In essence, it is the opposite of an acquisition in which a larger “parent” company purchases a smaller company resulting in a clear hierarchy of decision making. Even if the acquired company retains its original brand identity, it is clearly a subsidiary of the parent company.

Nevertheless, mergers of equals give both companies a chance to expand their reach while at the same time reevaluating their name, brand identity, and management structure. Often both legacy companies are coming together with the intention of unifying as a team and creating something new.

The challenges and opportunities associated with a merger of equals

Challenges and opportunities go hand in hand when it comes to rebranding a merger of equals. The following is a rundown of the most common obstacles and opportunities you may encounter.

The challenges

  • Who’s in charge? In a merger of equals, both companies bring full power and decision-making authority to the table. But without a more hierarchical “parent-child” power dynamic, these rebrands often lack a clear path for decision-making. In addition, it is difficult to identify who is in charge and which individuals from each company should be included on the brand transition team. Without a neutral third party to guide the rebrand, this can sometimes create a situation in which various employees jockey for position, wasting time and energy in the process.
  • Employee buy-in. In a merger of equals, both entities stand to gain from joining forces. But the merging and rebranding process will be a time of necessary change and — quite possibly — anxiety for the members of both organizations. The truth is that a merger of equals will almost inevitably include redundancies and restructuring of roles and responsibilities throughout the organization. This involves making tough decisions, and not everyone will stay in the same role moving forward. Employees understand that a merger may have implications for their individual positions. As a result, it may be harder to achieve buy-in and alignment to identify the appropriate rebrand project organizational structure, processes and transition strategies to successfully implement the new brand.
  • Clarity without transparency. In some instances, companies pursuing a merger of equals must withhold information from each other until a federal agency (the Department of Justice (DOJ) in the case of U.S. deals) reviews and approves the merger. This is to protect both organizations in the event that the federal agency rejects the merger and they must go on as independent entities. In the meantime, the two companies must plan their intended rebrand in a so-called “clean room” or “white room” process. This lack of transparency makes it that much more difficult to plan and execute a rebrand effectively, as they are unable to share the required level of detailed information regarding timelines, resources, processes, budgeting, etc.

The opportunities

  • Build a better, stronger brand. A rebrand due to a merger of equals represents an opportunity to create a new brand identity that represents the best of what both legacy firms have to offer and that is expressed more clearly and consistently.
  • Rationalize and capture efficiencies. In rebranding a merger of equals, companies have the chance to learn from each other, improve processes and capture efficiencies. For example, during the rebrand, companies can compare notes and rationalize assets, vendors, and supplier relationships for the newly combined entity moving forward.

Why you need a neutral expert to guide you through a rebrand for a merger of equals

When organizations bring BrandActive on board to manage a rebrand for a merger of equals, we bring all of our usual processes and expertise to bear on the project. But we are also able to help in other ways that uniquely address the challenges associated with this kind of rebrand.

The importance of an objective outsider with a clear process

First, BrandActive is objective and neutral. Our goal is to map processes, define roles and responsibilities, and make recommendations that support the overall goals behind the decision to merge and rebrand. The tactical components of the integration, such as how to build holistic, end-to-end rebrand strategies that account for integrating systems, employee processes, branded assets, and so on, should all support the new brand’s identity and intentions. But these are the very decisions that seem most challenging when it comes to combining two fully functioning, independent entities that also have equal power.

For example, we help our clients put together a rebrand transition team that pulls key stakeholders from both entities. In addition, we assess each company’s assets and operational processes and present a recommendation for how the newly combined organization can incorporate the best of what each legacy company has to offer. And perhaps most importantly, we offer a clear and neutral approach which is essential to gaining trust and assembling a team whose members can rise to the occasion and perform at a high level together. This enables us to identify the best solutions for the new entity, regardless of whose ideas and legacy processes win out.

Better cost estimates — even in a white room process

Secondly, BrandActive helps clients planning for a merger of equals create more realistic cost estimates for a rebrand. Because we can have fully transparent conversations with both companies independently (who may be unwilling or unable to share with each other until the merger is fully approved), we are able to construct much more refined budgeting scenarios based on available factual information instead of assumptions. And we can do this in a way that still protects the boundaries of the “white room” process. The result? More confident projections around cost, timing, risks, and opportunities from the very beginning.

Finally, where merger-of-equals rebrands involve decentralized organizations (particularly those with global reach), it is much harder to take an accurate measure of the breadth of change that will be required to effectively rebrand. BrandActive can help decentralized organizations optimize their rebrands by mapping out the key stakeholder journey for the new entity, exhaustively cataloging the full scope of branded assets that need to be converted, and producing recommendations for how to transition assets.

Interested in learning more about how BrandActive can help your firm navigate a rebrand? Drop us a line.

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