[EP 023] Brand and Communication Strategies for Mergers and Acquisitions

Hi, it’s Joanna Oakey here and welcome back to The Deal Room Podcast, brought to you by Aspect Legal.

Joining us today for this episode is Sophie Bartho of Brandswell, a company committed to “growing brands with authenticity and truth.” We have a lot of interesting insights for you today from Sophie’s years of experience working with clients and their brands as they go through the merger and acquisitions process. So grab a cup of coffee, relax and let’s get to it!

Joanna: Hi Sophie, welcome back! And I say welcome back because we’ve also been lucky enough to have you on the sister podcast of the deal room, Talking Law, where we were talking about brand strategy as a whole and re-branding for business.

So listeners if you’re interested in hearing those episodes, head over to our Talking Law website which is talkinglaw.com.au or you can access it via our law firm website at aspectlegal.com.au and there you are looking for Talking Law Episodes 43 and 44.

But today we are lucky enough to have you back here to talk about brand and communications strategies. And I was going to call it branding communications strategies post merger or acquisition. But I think you cleverly picked me up on the fact that I was using the word post here. So you prefer to describe it as pre. Is that right?

Sophie: Absolutely, because often we’re brought in after the deal is done and terms of the deal have been signed. And sometimes we need to do a little bit of retrofitting in terms of brand.

Joanna: That’s very interesting and so let’s maybe reverse a bit here and start right from the beginning. Maybe you can give us a really short background on how you have been involved in the past in this space and what your interaction has been with branding pre mergers and acquisitions.

Branding Strategy in Mergers & Acquisitions

Sophie: So we’ve worked with a lot of clients through a combination of mergers and acquisitions both large and small. One example was the coming together of five different transport companies, five state-based transport companies who came together to form a federated model and present themselves as one national brand and then that has had multiple sort of further iterations of acquisitions and that’s been through constant changes over the last 13 years.

We’ve had other businesses that have acquired other businesses and what was interesting is we had one where, going back to our conversation around pre and post, where we we’re brought in after the deal was done so to speak and it had been agreed that they would present both brands in the marketplace.

Sophie: However, when we went through the brand strategy process, we realised that it would not be as efficient or as effective for the ultimate gain. Our recommendation to both boards was that they actually you know go to market with one brand and retire the other brand and that was universally adopted fortunately because it just wouldn’t.

Sophie: They didn’t have the resources to invest in and build both brands and they didn’t have the human resources either to manage it going forward. So there were multiple factors that influence that recommendation.

Joanna: I thought it was really interesting when you’re talking about the egos involved. I’m not sure if that was the terminology that you used. But quite often there’s a very sensitive environment where two brands who are coming together however that is actually described to the market.

Sometimes the reality of what it is behind closed doors is different and there can be a real human element that that these organisations are grappling with that can be reflected in brand.

Sophie: Yes, that’s absolutely true. At the end of the day, they’re human beings that have built that business and built that brand and when they are being offered (I use the term instructed or told) that that brand won’t exist and it will be superseded by something else, it can be very confronting and quite emotional.

Sophie: And that’s why I think it’s very important to go through quite a consultative process where you seek their opinions and their input and their perspective and take them on the journey and then that helps them understand why certain recommendations may be made such as retiring one brand and letting another brand take its place.

Key Questions for Businesses to Think About

Joanna: Okay and then this is probably a good point then to wrap back to the broader question of what businesses should be thinking about in relation to brand and communication in order to make a merger or acquisition that they’re undertaking work most effectively.

Sophie: I think one of the key questions will be why is the merger taking place. And then who will be impacted by that merger. And in terms of who will be impacted, how will they feel and how and when will you let them know. Because different stakeholders will be informed at different times through the merger process and it’s really important to have a lot of empathy for all those different stakeholders.

I think for the lawyers who are listening it’s really important to think about everybody that will be impacted by these decisions. And then considering the impact on the brand and the communications immediately, not after the deal.

One of the things we first do is define all the different stakeholders and then define the different messages that they may need to hear and they’ll need different messages at different times throughout the merger and/or the acquisition.

Another critical consideration is confidentiality. We often remind our clients that we can talk about confidentiality. However you know as soon as something is released internally, it is for external consumption as well.

Joanna: And from everything that you’re talking about right now. You know I can see it makes total sense why organisation should be potentially thinking about having an external party come in and look at these sorts of issues because I think when an acquisition is taking place there’s so many moving parts that everyone in the organisation, but particularly senior management, are focused on to ensure that the merger of acquisition happens effectively and smoothly.

So I guess sometimes maybe it takes someone from an external perspective that’s tasked particularly with looking at communication and branding to be able to isolate those issues from all of the other moving parts that everyone else is looking particularly at.

Sophie: Yes and I think the other quality that we bring or an external party brings is some very rigorous objectivity. So whilst you know it’s easy to make assumptions and say Oh look they’ll be all right they’ll understand or they’ll just have to suck it up. It just won’t be as successful if we haven’t been inclusive and consultative and really had some empathy for how people are going to feel and what will be the impact on them day to day.

Brand Choices and the Merging Cultures in Integration

Joanna: It’s interesting. I just had a podcast interview before the episode that is just before this episode that we’re talking about with a guy called Dean who’s at the coalface and he deals with the integration and he cited one of the biggest issues that he saw where problems had arisen in the actual integration relating to culture in merging the cultures. So how does that reflect in brand choices?

Sophie: The way Brandswell approaches it is through this stakeholder engagement and it might be one on one interviews. It might be group workshops. It might also be surveys. We get a deep understanding of what are the core values and what are the cultures within the organisation and where are they complementary or where there might be some quite jarring misfit.

Sophie: It’s interesting if I reflect back on all the years usually they are complementary but they need to be slightly re-defined and re-articulated under the new brand and as the new organisation. So there needs to be almost a demonstration of you know that this is a shift, this is a change and whilst we have been you know organisation A and organisation B, we are now organisation X Y Z.

Joanna: Yeah.

Sophie: I’m not sure if you’ve heard of the ADKAR model by Prosci? It’s something I love and we often refer back to and ADKAR stands for awareness so awareness around the need for change. Then the next step is desire and that’s desire to participate and support the change then you need knowledge on how to change then A for ability to implement the required skills and behaviours to change and then reinforcement so that you can sustain the change and stay on that journey.

Sophie: But I think that ADKAR model is a really beautiful, simple, succinct step point to reference when you’re going through significant change such as a merger and acquisition.

Joanna: Okay. And is this a process that you take your clients through?

Sophie: It’s part of what we I guess overlay and wrap around our Brandswell methodology. Our process is built around defining and understanding the core values and then the culture as we just talked about. Looking at the benefits of the brand and the organisation and both the rationale for what one gets from the brand but also how the brand makes people feel. And then we get into the very quite interesting, challenging end about the proof point.

Sophie: So we look for the evidence and tangible reasons that you can believe those values believe that culture and believe those benefits and then we look to define the value proposition and then the brand essence and the brand essence is where we get into the sort of heart and soul of an organisation and why it exists and why do people come to work every day and invest their lives in this organisation.

Joanna: Wow. It sounds very deep. I never before realised that the development of brand and brand strategy would go so deep.

Sophie: It is. We’ve had clients on occasion say our work has been like therapy for them.

Joanna: Yeah. I can hear it.

Sophie: Yes, but I think what’s you know for us what we find validating and important is then the longevity of those brands. So we’ve had brands that we know have taken through mergers and acquisitions 13 years ago and they are still standing the test of time.

Joanna: There you go. The proof is in the pudding.

Let’s Take a Short Break

Let’s take a short break. When we get back, Sophie takes us through some common mistakes that businesses make in brand strategy and then on the flip side, we will also discuss success stories where branding was done right. And finally, we’ll close this episode with some helpful tips for brand and communication pre-transaction.

And that’s next! This is Joanna Oakey, and you’ve been listening to The Deal Room – a podcast brought to you by Aspect Legal.

Our business sales and acquisitions services

Aspect Legal has a number of great services that help businesses prepare for a sale or acquisition to help them prepare in advance and to get transaction ready. And we’ve also got a range of services to help guide businesses through the sale and acquisitions process.

We work with clients both big and small and have different types of services depending on size and complexity. We provide a free consultation to discuss your proposed sale or acquisition – so see our show notes on how to book a time to speak with us, or head over to our website at Aspectlegal.com.au

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Welcome Back

Welcome back! Earlier Sophie talked to us about the importance of branding strategy in mergers and acquisitions. She also identified key questions that businesses ought to start thinking about in order to make a merger or acquisition work most effectively. Let’s keep the conversation going and dive into the common branding mistakes that businesses make.

Common Mistakes in Brand Strategy

Joanna: And you know I’m really interested to hear what mistakes you have seen made along the way perhaps where people have not appreciated the importance of looking clearly at this area. Because I think perhaps you know from what I’ve seen this is certainly not always an area that’s given a lot of attention.

Sophie: Yes, now look there’s lots of mistakes that can be made. I think the first one is that lack of empathy that I referred to earlier. So really pausing and considering who’s involved and what will be the impact on them.

Sophie: I think another very important consideration or possible mistake is not understanding what the investment that’s going to be required and the investment in terms of time and money and also talent. You will need to allocate some human resources to make the journey successful.

Sophie: I think honesty is another really important factor and an area that you can make mistakes by pretending that it’s the reason behind the merger or the acquisition is one thing when it’s really another thing. So we in our sort of process and deep questioning we often realise that. We’ve had situations where we’ve been told it’s a merger it’s a merger it’s a merger but really it’s an aggressive acquisition and then there is going to be some pain and it’s not until we get to that truth that you can manage the process appropriately.

Joanna: And so what do you see as one of the downsides of that approach of not being completely transparent I guess with the reality of what’s happening in an organisation?

Sophie: What I love about working in the brand space is that a brand is all about a relationship and relationships are built on trust. So the moment you challenge or threaten that trust, it can be extraordinarily damaging to the brand.

So you’ll not only lose the trust and faith of your existing stakeholders but they then we’ll talk about your business talk, about your brand and you know the classic ripple effect. So you won’t only lose faith with possibly the people that might be exiting the organisation but those who are left within the organisation then have that seed of doubt.

Joanna: What’s a better way then do you think?

Sophie: I think it’s always about being honest and you need to be respectful of everybody’s unique situation and in being honest it is about crafting messages and carefully delivering them and the timing of those messages. But there is no other way to go about these journeys of change with. You have to be honest.

Joanna:  I completely agree with that. I completely agree with your philosophies there. But it’s interesting because I think the difficulty sometimes for organisations in working out how to communicate that sometimes prevents their honesty.

Sophie: Yes and I think that sometimes by being honest it might be a short term pain for a long term gain. So you might need to deliver some very hard realities to people but you ultimately, you don’t leave them second guessing. You give them the resources for them to move forward as opposed to be left wondering and left with that seed of doubt.

Joanna: And sometimes that’s also the issue that can be caused by part information I think as well you know where part information creates uncertainty for people without providing them with any sort of guidelines as to what the end result is going to look like.

Sophie: Yes. We always say “If you don’t tell them, they’ll make it up.”

Sophie: So that’s where you need to be in full control of the messaging and the communication at every step point.

Joanna: I have seen some organisations you know. Organisations can deal with this in a range of different ways and of course sometimes it depends on the size of the organisation as well but it seems to me where staff are brought along on the journey a long time before the journey even properly starts is where you often see perhaps the most success in alignment where staff feel part of the process.

Sophie: Yes that’s certainly our position and also our methodology. It’s critical to involve people and we use the expression “take them on the journey.” Walk with them. And that creates alignment. You build engagement. This is where you start to build rapport and that trust that we’ve said is so important.

Success Stories of Brand Strategy Done Right

Joanna: Okay. All right so we’ve talked about mistakes then. Maybe on the flip side you could share with us some success stories of this done really well. What does that look like?

Sophie: Well I’ll use a few examples that we’ve got from the last few decades actually if I think about it. One is where we brought together five state based courier companies were coming together because they’d recognise that in order to compete with the larger transport providers they needed to demonstrate a national presence. So five state based organisations coming together and we rebranded them as Australian National Couriers.

Sophie: Now that was way back in 2004 and of course in the last decade plus a lot of the movement of documents has changed thanks to the Internet and this organisation then realised in 2012 that their brand Australian National Couriers needed to evolve yet again because the courier work was diminishing and they were doing more and more bulky goods. So they needed to communicate in their brand a very different message.

Sophie: What was interesting is in the stakeholder process we found that the acronym ANC was really solid within the organisation but also with their customers. So we adopted the acronym ANC but we needed to articulate and explain what did ANC stand for. So with the url ANC delivers that became their new brand name and with a positioning statement “You’re integrated distribution partners.” So it was quite a long journey over almost one and a half decade now of bringing five organisations together, building one brand and then needing to move it yet again to stay in pace with the marketplace.

Joanna: That’s a really good example. I really like that example. Are there other stories that where you have seen turnarounds?

Sophie: Yes. A lovely one is actually mushroom grower and they were a family business and they had five different brands within their portfolio. However, because of the different brands, they realised that they were less effective in competing with their major competitor who was the market leader. So by actually coming together as one unified brand, they suddenly had the volume and the size to compete against the market leader and create some significant reputation and make themselves relevant in the marketplace.

Sophie: And that’s an interesting story because of the family dynamic within the business. And as we touched on earlier in the conversation, the emotional relationship that individuals will have to their brand, their business and sometimes to encourage and ask them to move together can be challenging.

Joanna: And I mean it’s really interesting hearing you talk about this example because it sounds like branding helped them to compete in the market, which is an interesting concept. And did their did that also include an acquisition strategy or was it all around branding?

Sophie: No. There was also acquisition in that. And I think the lovely sort of example in that is sometimes you’re actually creating internal competitors. You’re competing against what should be an ally. And by coming together and recognising that we’re actually one business with one ambition, you can create a lot more power and efficiency – that’s the other big factor is the efficiencies gained.

Joanna: Some of these examples that you’ve been talking about sound like larger organisations. Is this only applicable to large organisations or large acquisition transactions?

Sophie: No, the same applies for very small organisations and even start ups. I think by really clearly defining and understanding the brand before you start investing in your ongoing marketing communications is critical.

Sophie: We’ve got examples of you know a you know a locally based accounting firm who had national ambition. They then did go through an acquisition and through.

Joanna: That’s a great. That’s a really great example. So and here you know I guess we’re talking about potentially a smaller organisation then going through an acquisition and realising to be something to be what they needed, they wanted or had the vision to be in the future. Their brand just wasn’t going to work for them and so they needed to rebrand to encompass the whole that they wanted to become into the future.

Sophie: Yes and look that’s an interesting example where the original brand name was the two founders’ names. And I think it’s interesting because you get a lot of that in the legal profession and also in the accounting profession and it can serve some businesses well. But for this organisation who wanted to well and truly go beyond those two founders, it was time to recognise that in their heritage but to adopt a very distinctive new name in the marketplace.

Joanna: And so they adopted this distinctive new name and where are they now? I’m sure it must be interesting for you to see the evolution of these organisations from a principal named accounting practice undertaking a few acquisitions, having a vision for the future that is now represented through a new brand and so where are they today, Sophie?

Sophie: Well they’ve gone from a you know I’ll say a midsize regional, a mid-sized firm based in regional New South Wales to having offices all the way up and down the eastern seaboard. So significant growth and and brand recognition. I think the other thing is the new brand name helped them expand their range of services. So it was also about making sure it held the big vision for them.

Joanna: And rebranding for that organisation, did you run through the same processes that you have been talking about that you might run through with larger organisations?

Sophie: Yes, it doesn’t matter if I’m doing it with a CEO of an organisation at the moment and it’s he’s one man band and I’m doing exactly the same I call it the interrogation of deep diving and asking a whole lot of questions around core values and the culture and what benefits does the brand deliver and what are the proof points and you know and then into that deeper area of why did they why does he do this. But we do this exactly the same process for larger organisations. We ask the same questions of Chairman, Board members staff and we we like to go throughout the organisation and get as many people involved as possible because everyone’s experience with the brand is different and equally relevant to how we get to know that brand and then how we can define it going forward.

Tips for Brand and Communication before a Business Sale

Joanna: Fabulous. Okay all right. Well are there any action tips that you have for our listeners in this area in terms of thinking about brand and communication pre rather than post transaction.

Sophie: Yeah, I probably have a few. And the first one is about understanding the stakeholders both internal and external. And as we touched on at the beginning who will be impacted by this merger and/or acquisition and put yourself in their shoes and start to think about how they should be approached and communicated to.

Sophie: The other one is to look at the marketplace and how well how might this merger and acquisition be perceived and another important question is does it make the business or anyone in the business vulnerable. So looking at both sides of that equation.

Sophie: Another consideration is the focus. So how do you stay focused on the day to day business besides despite what will be a significant distraction caused by this merger and acquisition and that’s where it’s very important to have that mindfulness and allocate the required resources and potentially some external resources as well.

Joanna: I think that’s a really good point and and sometimes also where these transactions involve a component of an earn out which sometimes happens. It’s even more imperative to allow the people who have the focus on the growth for example to just be focusing on that and not have to delve into each of these other areas themselves and take their eye off the ball of where they’re going.

Sophie: Yes.

Joanna: It’s easy for you to the people who have the focus on the growth for them to just be focusing on that and not have to deal with these other areas themselves and take their eye off where they’re going.

Sophie: Yes yes. And look I’ve seen businesses where they have spent months working on a merger and acquisition and it doesn’t actually come to fruition and then they see that downturn in revenue. It’s fairly evident why that’s occurred.

Joanna: Because they’ve been too focused on building for the for sale and taking their eye off the. And then of course that impacts into the future if they’ve lost one transaction, they’re after the next. That now impacts the sale value moving forward.

Sophie:Yeah, very important. On the other side is it’s really important to look at the opportunity. So how can you leverage the full opportunity of this merger and/or acquisition. You know it can create media opportunities, marketing opportunities. It can be an opportunity to retain talent, attract new talent. And as we’ve talked about it can be a very exciting branding opportunity.

Joanna: Fabulous. Okay great. All right. Well look. Thank you so much for your time Sophie. You have provided a wealth of information about critical issues I think for organisations to think about before they even you know put in place the transaction as you say pre not post transaction.

Joanna: And how can organisations contact you Sophie if if they’d like a little bit of assistance in in going through this process?

Sophie: Look we would love some conversations with anyone who is curious to know more or might be concerned about the journey that they’re on. I’m available on e-mail [email protected] or you can call me on 0411 191 141.

Joanna: Fabulous. And that’s very generous for you to give people a contact number. That’s. I must say it’s actually it’s rarely done these days personal contacts. And I think obviously you’re walking the talk of your brand in terms of making yourself available for personal communication. And you know I love that. I love it.

Joanna: Now if listeners are jogging whilst listening to this, driving along in the car, don’t don’t potentially cause an accident by trying to get down Sophie’s details. Head over to our show notes at thedealroompodcast.com where we will link straight through to Sophie so you can catch her if you’d like to talk about this area in more detail.

Once again thanks for coming along Sophie. It’s been great to have you on board.

Sophie:  My pleasure. I love talking brand.

Legal Wrap-up

Joanna: Well, that’s it for this episode on branding with Sophie Bartho. I thought perhaps it might be useful here to throw in a short legal wrap up as well because in this episode we talked a lot about branding and if you’re looking at buying a business with a strongly defined brand, that will be important to the success of the ongoing business you really need to carefully deal with ensuring that the brand is adequately protected.

This means doing your due diligence properly and ensuring that you’re getting the right records that may be needed in the future to defend or protect your brand rights. So I’d say this, obviously you’ll engage advisors to help you through the process but it’s ensuring that you’ve got advisors who understand the elements of risk that sit in this area in relation to branding and IP generally for the business. And it’s not just about ensuring that the IP is protected but it’s also about ensuring that the records that you are receiving are appropriate and as may be required for your future ownership of the business.

On the other hand, if you’re acquiring a business where you intend to rebrand, be extremely careful of the process that you adopt. We’ve had so so many examples in our legal practice Aspect Legal, of clients engaging in the creative process without engaging legal at the same time which in the most part ends up with wasting money on creatives for brands that hold ongoing legal risk or that simply can’t be protected.

And one of the issues is that if you can’t protect a brand, then effectively you’re saying that you can’t really protect the amount of money that you’re putting into your marketing spend and your branding spend as you start to get consumer association with the brand that you’re adopting. So brand protection is an important way for you to protect that money that you’re investing. This is really one place where engaging with legal early will almost definitely save you time and money.

Well look that’s it for this episode. If you’d like more information about this topic head over to our website at That Deal Room Podcast dot com where you’ll be able to download a transcript of this podcast episode if you’d like to read it in more detail. You’ll also find details there of how to contact Sophie Bartho of Brandswell.

There you’ll also find details of how to contact our lawyers at Aspect Legal if you or your clients would like to discuss any legal aspects of sales or acquisitions. We’ve got a large number of great services that help businesses both prepare for a sale or acquisition to help them get ready in advance, transaction ready. We’ve also got a range of services to help guide businesses through the sale and acquisition process whether they’re buying, whether they’re selling, whether they’re big or whether they’re small. We’ve got loads of different types of services depending on size and complexity. So don’t hesitate to book a free appointment if you’d like to find out how we might be able to assist.

And finally, if you enjoyed what you heard today please pop over to iTunes and leave us a review and if you have any content that you would like to hear about on The Deal Room Podcast or indeed any business owner who bought or sold businesses, or any professional involved in the Sales or Acquisition process that you’d like us to interview just pop us an e-mail via our website at aspectlegal.com.au.

Thanks again for listening in! You’ve been listening to Joanna Oakey on The Deal Room Podcast brought to you by Aspect Legal. See you next time.