acquisitions Tag

One word is critical to M&A Success – CULTURE

One word is critical to M&A success – CULTURE

We learned last week that Hewlett Packard Enterprise is merging its enterprise services unit with Computer Sciences Corp (Read the full story). This is a perfect opportunity to talk about the consequences of mergers on identity and brand, and how having a solid strategy for both is key in your merger’s success.

Research has shown that as many as 83 percent of mergers fail to achieve their original business goals. Brand value, or goodwill, suffers right along with business value, often destroying the appeal and premium that might have inspired the acquisition in the first place. Why is this? Because culture, and the purpose behind each organization being combined, is often ignored in favor of the numbers.

These deals are put together by attorneys and investment bankers, who fail to consider the cultural implications of the merger. These people think in terms of “synergy” and 1 + 1 = 3, when the real goal should be 1 + 1 = 1.

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Managing Brand Complexity: Staying Ahead of the Curve

Managing Brand Complexity: Staying Ahead of the CurveLarge companies—like GE, Google, Samsung and others—know this law of branding firsthand: As you grow in size, you will grow in complexity. Acquisitions, organic growth, market segmentation and product and service extensions all add complexity to brand portfolios. How should large successful brands such as these manage brand complexity?

Growing companies realize they need to support the strength and cohesiveness of their corporate identities, while also accommodating the needs of their individual brands and sub-brands. We call this “brand balance.” This balance gets harder to control as you grow; there is a very real complexity curve that gets steeper with a company’s size. To remain successful as you grow, it is important to learn how to stay ahead of this complexity curve.

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Brand Diversification: When Is it a Good Idea?

Brand Diversification: When Is it a Good Idea?In April I posted a SlideShare presentation (below) about tech startups and key brand considerations as they grow. In it I described Facebook’s decision to retain the WhatsApp and Instagram brands as part of a brand diversification strategy. Retaining acquired brands (rather than renaming and assimilating them into the parent brand) can be useful if they appeal to audiences, or deliver services that are not aligned with your core brand. While Facebook has 1.2 billion users, both Instagram and WhatsApp have hundreds of millions of loyal users. Since many of these users prefer these acquired apps over Facebook, it may make sense to keep those brands separate.

I also remarked that Facebook could continue to grow by following this type of diversification strategy, although it risks cannibalizing some of the popularity of its flagship brand. Now Facebook has publicly committed to this diversification strategy, which has been dubbed by some as “unbundling.”

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