Evidence says that most M&A deals are slated for failure. Several strategies combined in the right proportions can save a merger from impending death
There is considerable evidence that many M&As fail. Estimated failure rate goes usually from 60 to 80 per cent. Despite the increased attention on post-merger integration (PMI), dynamics of how two firms’ marketing strategies are integrated have been largely neglected. Considering that M&A activity is predicted to increase as more CEOs use M&A strategies to grow/exit their business, also marketing and communications for post-acquisitions are expected to gain proper focus and attention.
Nevertheless, the lack of attention given today to marketing issues is interestingly in contrast with the findings of merger failures’ analysis, which indicate lack of proper communication and customer retention activities among the major reasons of such failures. Customers in fact tend to stop investments and put their relationships on hold, until a clear message is delivered by the firms.
Competitors often take advantage of the situation reinforcing the negative perception that clients have about the two merging firms; sometimes they take it as an opportunity to steal customers in whichever way they can. In some instances, this will be a direct marketing or sales campaign towards the largest or most profitable customers. In some industries, such as IT or pharma, they may directly target salespeople with a view to stealing them.
To make the situation even more challenging, managerial energy during post acquisitions is often used in internal tasks neglecting customer and marketing-related issues; PMIs are in fact often internally oriented. A possible consequence is that decisions are made predominantly on the base of internal criteria such as organization, processes, structure.
Hopefully integration will be driven soon by customer-related considerations creating additional customer value rather than reducing the cost of serving them. While marketing will gain the right attention, here is a series of points which I would suggest companies to look at before planning any kind of post-mergers integrations.
- Communication with all stakeholders
Mergers involve uncertainty and risk. Communication is essential to focus the organization and to help mitigate these risks. Customers are the first target: they often take their business elsewhere just because they receive inadequate information. A proper customer communication plan should be in place at least a couple of months before the formal acquisition.
Communication is essential to focus the organization and to help mitigate risks.
But they shouldn’t be the only communication target. There is a list of other stakeholders to think about. It’s important to consider which of these are important to the business and to make sure they are communicated with appropriately. Once key-issues for each stakeholder group have been identified, the company will be ready to communicate using proper channels.
For example, right immediately after the acquisition of Invensys in January 2014, Schneider Electric focused heavily on internal and external communications. The communication plan supporting the acquisition was tailored to the identified audience and was segmented by customers and partners types: customers, partners, system integrators, OEMs, distributors, JVs, supply chain partners. The plan included external and internal communication assets (videos, blog posts, social media packages, press releases).
- Internal Communications
Internal communication is a second area of focus. A message sent is not necessarily a message received. People should be sent the integration communication and messages time and time again. Employees need to understand what the firms are trying to do, what the vision is and what they are required to do. Telling people what is going on, what will happen and what we want and expect from them is crucial. With more informal, face-to-face communication in and around the merger the formal material becomes more credible and useful among employees. Even at the risk of over-communicating, it’s crucial to create emotional connections between the company and its constituents (“don’t tell me what’s happening; tell what’s happening to me“).
- day-1 and day-100 plans
Planning, planning, planning – full integrated plans of intended marcom activity, at different stages of the acquisition (e.g. ‘day-1’ and ‘day-100’) with costs and benefits, together with deadlines, associated actions, dependencies and risks are a must-do for all integration teams.
- Centralized communication process
Centralising the communication process is key to guarantee consistency around the globe. The central marketing team should release messaging and assets to the countries time before the launch dates, to make sure proper translation and localisation of all assets were done in time
- A common “messaging platform”
Use a singular message that’s relevant to all of your audiences and use it to launch and cap all communications. Make the complex simple. During the acquisition of Invensys, the marketing integration team created a 10-pages ‘message platform‘ or ‘messaging playbook‘ which was distributed to executives and all regions and provided strong consistency and control over messages communicated around the world.
- Branding strategy
Individual branding strategy should be released for each of the acquired brands. A ‘one size fits all‘ approach is not going to work and might create dangerous situations with clients and employees of the acquired firm.
For example, from a branding perspective Invensys brought several independent brands which had to be integrated within Schneider Electric’s portfolio under Schneider’s “one-brand” strategy. Under the one-brand policy all brands had to migrate to Schneider Electric: most of them were moved straight after the acquisition, while others were rebranded at a later stage.
The objective was to deliver a consistent customer experience under Schneider Electric brand while also transferring Invensys brand equity to Schneider Electric. The team in charge of the integration process had to define a specific path for each brand that had to be consistent with the Schneider Electric strategy; each brand was evaluated on customer install base, geographical scope and overall brand equity.
Six “associated” brands were identified. Associated brands will transfer equity on the long term to the master brand through association and promotion of the combined brands. All other brands migrated to the Schneider Electric brand immediately after the acquisition.
- Employees advocacy
Employees advocacy plays a critical role with the alignment of the two companies’ cultures, removing biases and clearing initial concerns. Social Media represent the natural channel to put this strategy in place.
After the acquisition of Invensys, a very exciting ‘experiment’ was represented by a social media competition started few weeks after the main campaign was launched, to recognize the power of Schneider Electric and Invensys employees coming together as ONE. The idea was to show the world that we were positive and strong, and together we could solve our customers’ toughest problems. The competition encouraged our employees to use their personal Twitter accounts to tweet about the power of being “Better Together “. For every tweet posted with the #BetterTogetherSE hashtag the firm committed to donate a corresponding amount to Habitat for Humanity (one of our global charities), with a goal of reaching a donation of 20K€.
Digitalise your way into a successful deal by deploying our world class M&A solution. Contact us at firstname.lastname@example.org