Brand M&A

May 2024, Written by Sholto Lindsay-Smith

The merger of Allen & Overy and Shearman & Sterling will result in a new brand, A&O Shearman. Demonstrating a clear strategic intent, A&O Shearman revealed the new brand alongside the announcement of the formal decision to merge.

Getting the branding process right can help create internal alignment as well as communicate the benefit of the merger to clients. But getting it wrong can quickly destroy value, with culture clashes, power battles, staff fallout and everyone’s attention turned inward.

The process of integrating two brands is not easy. And there are many studies to testify that most mergers and acquisitions underdeliver and many destroy value.

From a brand standpoint, this is unsurprising. Brand building is a long-term strategic endeavour. It takes significant time, effort, and discipline to build a brand. Powerful brands are built when a firm achieves alignment through the business, and everyone can see a straight line running from the core purpose through the business strategy and brand positioning to the brand identity and culture and ultimately the brand experience that impacts the customer. The disruption of a merger, that involves the challenge of aligning two organisations, is bound to be fraught with risk and difficulty.

Back in 2006, a report by KPMG, The Morning After, which examined post-deal success factors identified that a difference in organisational culture was the second biggest post deal challenge, yet 80 percent of companies were not well prepared to handle this. A more recent McKinsey report, Addressing the Unseen Forces, identified cultural factors and organisational alignment as being critical to success and avoiding failures in mergers. It says that 95% of executives describe cultural fit as critical to success of integration, yet 25% cite a lack of cultural cohesion and alignment as the primary reason integration fails. This suggests organisational and cultural alignment persist as one of the real challenges of brand integration.

The key to success is staying focused on answering three questions that will drive brand alignment:

What is our unifying purpose?
What are our brand values that will define our service culture and client experience?
What are the real benefits that the merged brands will deliver to our clients?

Note, they are all outwardly facing.

Brand due diligence
With a narrow focus on name and logo, brand is often neglected as a consideration or left until too late in the deal process. But this misses the strategic opportunity.

Brand due diligence should mirror the deal timeline to strengthen the strategic planning process, provide a robust assessment of the brand and cultural fit and facilitate the efficient execution of assimilation and integration activity. This process helps ensure the ability to hit the ground running, demonstrate clear leadership and sense of purpose, drive-up employee engagement and speed-up integration. This means value from the deal can be realised more rapidly.

The process can be divided into three core phases of activity:

Phase one: Pre-deal
This is about finding the right fit. A strategic options analysis involving a market review and mapping of the brand positioning of key players in the market together with an assessment of your own firm’s brand strengths should be conducted to identify target candidates. An initial assessment should be made of potential brand synergies such as market coverage, technical expertise and capabilities, culture and reputation.

Phase two: In-deal
Once in-deal, a fuller due diligence process can take place. This should involve a review of the target firm’s corporate and employer brand data, as well as a review of employee engagement data including internal engagement surveys, new joiner and exit surveys. If not available, independent client research should also be conducted to validate the firm’s brand reputation and levels of client satisfaction. The assessment should also examine and compare the documented brand strategy and plans for both firms to identify gaps in alignment as well as new opportunities.

Ahead of the deal completion, scenario planning can help to evaluate the optimum brand strategy.

As the deal draws towards completion, work should be undertaken on articulating the shared vision and values, defining the brand positioning for the new firm and if appropriate developing the new brand identity, ready to launch on day one.

Phase three: Post deal
Post-deal the focus is on value extraction through tight implementation of the customer facing brand and employer brand and engagement strategy. Here it is vital that everyone is working to common objectives and KPIs, already agreed in the previous phase. A clear strategic brand focus not only helps focus effort in the right place, it also helps win the confidence of the marketers from all sides. And clear objectives help remove the politics from the task.

It is a highly involved process, but it’s much cheaper than the cost of failure.

What is the optimum brand strategy

Traditionally the merger of professional services firms has resulted in the conjunction of all the firms’ names, often leading to an unwieldy three- or four-part name. The intent being to support buy-in from all sides. But is it always right to keep both brands in play? And what do you do if there is a second, third or fourth merger planned down the line?

The impracticality of managing a long name in the digital age is forcing professional bands to reconsider their approach.

We have already witnessed the big four accounting networks truncating their brands to either a single name or set of initials.

The merger of Allen & Overy and Shearman & Sterling will become A&O Sherman. The use of initials makes the brand shorter, and it is a fair bet that the Sherman name will be dropped in time once the merger is understood in the market.

The three-way merger of CMS, Nabarro and Olswang trades under the shorter CMS.

Typical of a more acquisitive firm with a dominant brand, Birketts has fully absorbed its acquired brands, avoiding any dilution of the Birketts’ brand or issues with future acquisitions.

When Taylor Vinters became part of Michcon de Reya Group, instead of being fully absorbed, it kept its distinct proposition alive under the new sub-brand Mischon Future.

More unusually for a professional services firm, wealth manager Tilney’s acquisition of Smith & Williamson resulted in a new brand name, Evelyn. The brand name change, as the CEO stated, “reflects that we are one firm united by our purpose – to place the power of good advice into more hands.”

These are promising signs that professional services firms are now taking a more considered and creative approach to the integration of brands. We will know when brand has come fully of age, when it is considered a step earlier as part of the pre-deal assessment ranking alongside financial due diligence.


First published in PM Forum, March/April 2024