2021 delivered a record year for mergers and acquisitions (M&A) globally, with a total value of $4.7 trillion in deals — 32% above the prior single-year high in 2015. This was propelled by $2.8 trillion worth of deals in the U.S., which exceeded the previous high by 44%. While most experts don’t expect the same record levels in 2022, most are predicting another busy year, driven by continuing strong demand for well-financed acquirors.
With so much talk focusing on the dollar figures, one might assume that the activities associated with M&A transactions are strictly limited to each company’s finance department. On the contrary, as strong marketing strategies are crucial in driving the value of your company for M&A transactions, they are equally critical for maximizing the value of the transaction before, during, and after it is complete, as both parties move forward as integrated companies.
Driving Purchase Price Value
The importance of a thoughtful and well-executed marketing plan is widely recognized, but what about the value of a brand and its contribution to a company’s market value? Let’s consider the acquisition of Whole Foods by Amazon as an example. When this purchase was made in 2017, nearly 70% of the purchase price — $9B of the $13B total — was categorized as goodwill. It’s true that goodwill often provides a place to quantify future growth potential, but in this case, brand was clearly a large driver of those values. An authentic brand is more than a new coat of wax on an old car; it identifies and articulates the value you bring to clients in a relevant, genuine, and impactful way. And a well-executed brand does more than make your company look good. It can and does contribute to the market cap of your firm.
Messaging Your M&A
Merging with or purchasing another company is a genuinely newsworthy event, both externally and internally. Developing consistent messaging is critical. Key points should include:
- Client benefits
- Transaction rationale
- Key facts and figures (these vary for public vs. private companies)
- Employee impact
Once you have these important components defined and agreed to by all key stakeholders, you can craft messaging with details and proof points that articulate them. This should be the basis for all your communication about the M&A activity, and it should be tailored slightly based on your audience (e.g., are you communicating to customers, employees, investors, or some other group?). This is not the time to get cute with variety. Consistency is important as you begin to lay the groundwork for how you position the newly combined companies.
Maximizing Impact at Announcement
When it comes to publicizing your deal, distributing a press release and sending an internal email are important parts of the strategy, but they’re not enough. While all the tactics below may not apply to every transaction, these are factors to consider for some key audiences.
- How you communicate to the Acquiring company’s clients vs. the Target company’s clients will be different
- Tiered client groupings may be necessary; some clients may require a call or meeting, others an email from the CEO, while for others a blanket email may be sufficient
- Initial communication to each employee group (Acquirer and Target) should come from that company’s leadership with the appropriate tone and messaging
- Remember, they’re people; you may be excited about the possibilities of the combined companies, but it’s important to address employees’ concerns quickly and adequately to ensure as smooth a transition as possible
- Keep the communication going; whether it’s ongoing updates, FAQs, town hall meetings, or meet-and-greet events with leadership and new employees, make it a priority to fuel the companies’ integration with communication
- This is how you’ll inform your industry and the public, so be sure to highlight things that will differentiate the combined companies
- If you are filling a gap or introducing new innovation, be sure this is clearly and prominently messaged
Post-Announcement — Proceed With Certainty
Announcement day is important, but there is still much to do afterward, which is why work for this phase should begin well before the announcement is made. There are many other factors, but the two below are essential and tie directly to marketing:
- Company Name: Will there be a new name for the entire entity, a new name for the Target company, or will both companies keep their legacy names? Criteria for that decision are a topic for another day, but whatever choice you make, make the decision and announce it as close to the announcement day as possible.
- Company Brand: Whether the two brands will stand alone, be merged under the Acquiring company’s brand, or amalgamated to form a whole new brand, there are two keys here: Get it right, and get it done quickly.
Marketing can and should play an important role in your M&A strategy. Ahead of any transaction, be sure to maximize your company’s worth with a strong brand. Create effective messaging for your brand and leverage marketing strategies to optimize promotion of your M&A transaction. And finally, to help the investment yield lasting value, start branding and marketing integration planning early so you come out of the gates as soon as possible after the close with a well-articulated value proposition and message that describes and differentiates your new company.
Merging arrows image provided courtesy of SCORR Marketing.
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