Last year saw a n ear-record high in M&A activity, which at $3.5 Trillion was the highest activity recorded in seven years, according to the New York Times. Tiny startups (WhatsApp: $19 Billion) and major blue chip companies (DirecTV: $49 Billion) were swallowed up by larger acquirers for astronomical sums.
The conventional wisdom fueling these buying sprees goes like this: once a company gets to a certain size, organic growth becomes very difficult to sustain. Acquiring into new areas or capabilities is a much faster route to growth in revenues, capabilities, and ideally profitability.
But what happens to brand value in these transactions? How should brands be managed to retain or augment their combined value? Which company gets to keep its brand name and promise, and what happens to the other? In our experience, too few companies invest in the upfront strategic thinking and decisions required to get full brand value, and hence business value, out of their mergers.