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Aligning Purpose in Mergers & Acquisitions

 

Understanding the important role of aligning purpose and vision in mergers and acquisitions to guide future success.

The role of shared purpose and brand values in mergers and acquisitions (M&A) often takes a back seat to the financial and operational aspects of a business. In a bid for long-term post-M&A success, aligning purpose and shared vision plays a pivotal role that can dictate the overall success or failure of mergers and acquisitions.

To understand the important role that alignment of purpose plays in a successful M&A transaction, it’s important to understand strategic alignment and the tangible role that it plays in consolidating market share and facilitating future, long-term growth once the deal is finalised.

 

Table of Contents

  • The Role of Alignment in M&A Success
  • The Importance Strategic Brand Alignment in M&A
  • Strategies for Alignment in Mergers & Acquisitions

 

The Role of Alignment in M&A Success

Understanding and accounting for the crucial role of alignment in mergers and acquisitions can help to propel a company to new heights or, conversely, underestimating the importance of alignment can lead to significant setbacks for the parent company and the entity to be acquired.

Successful alignment in M&A transactions involves integrating the fundamental business operations, but also brand values, company culture, and future vision for the merging entities.

One study by McKinsey found that whilst 95% of executives cited shared values and cultural fit as a critical component of successful integration, most admit that it is not given the attention that it warrants. The research found that successful M&A requires aligning organisational capabilities that go beyond paper agreements.

The study further points out that M&A success necessitates executive-level alignment on performance goals, value strategies, integration risks, and establishing a unified culture and working practices under the new entity. Shared vision are crucial for steering the merged entity towards shared objectives and a common vision of success.

 

Strategic Brand Alignment in M&A

Mergers and acquisitions are often led by strategic and financial goals, which can present a complex set of challenges for brand alignment. Research from Harvard Business Review places the failure rate of M&A transactions as 70 to 90 percent and indicates that a myriad of different factors, including brand alignment, can have a profound impact on the success or failure of a merger and acquisition.

The merger of LAN and TAM Airlines to form LATAM Airlines Group is a perfect example of how a calculated approach to brand alignment can be an important catalyst for long-term success. In 2012, these two leading Latin American airlines embarked on a journey towards unifying under the cohesive brand of LATAM. The move was a demonstration in aligning distinct corporate cultures and communication strategies which required careful planning and execution.

The merger of LAN and TAM was, at the time, a risky consolidation of two successful brands. The decision to dissolve and combine under the LATAM Airlines Group was backed by a shared vision for creating a new, unified brand that would best represent Latin America to the world.

In addition to the visual alignment of brands which drew inspiration from the region’s geography, the alignment extended to a redesign of the entire customer experience. The redesign included the pre and post-flight experience, updating the in-flight entertainment, and revamping the frequent flyer program.

The strategic alignment of brand identity and vision, as demonstrated in the LATAM group’s M&A transaction, has been pivotal. This alignment has enabled the group to secure a leading market share in the Latin American domestic market. This was further enhanced through a joint venture with Delta which enabled LATAM to expand their services to more than 300 new destinations across North and South America.

 

Strategies for Alignment in Mergers & Acquisitions

Aligning brand and company values through mergers and acquisitions means looking beyond numbers and projections. Some important strategies throughout the process, include:

Aligning purpose, values, & vision: Assessing the compatibility of the merging entities’ brand values, company vision, and purpose statements is essential. This includes conducting audits and developing a new brand strategy that merges the best elements of both companies. The goal is to create a unified brand that makes sense to internal and external stakeholders.

Managing the impact of market perception: Understanding the way that a merger affects the perception of the target audience is crucial. Recognising potential pain points and maintaining transparency around the merger’s advantages, while also acknowledging potential conflicts and how they are being negotiated is an important part of this process.

Consistent, clear communication: Clear and transparent communication with stakeholders throughout the M&A transaction is essential. Developing a comprehensive communication plan with regular updates helps to build trust and credibility to allow a smooth transition and successful integration of brands.

Integrated branding materials, messaging & marketing: Integrating and aligning branding materials, messaging, and marketing requires a comprehensive audit of all existing materials and the development of a unified visual identity. The integration of brands is crucial for maintaining consistency and winning customer trust.

 

Final Thoughts

Blending two separate identities into a cohesive brand requires careful planning and execution throughout the M&A transaction.

Successful mergers and acquisitions rely heavily on the alignment of cultural, organisational, and strategic elements to foster long-term success. When these critical aspects of alignment in purpose are overlooked or poorly managed through the M&A process, the efforts are far more likely to yield failed, or suboptimal results. To learn more about how Brand Council help brands to put their purpose into practice, get in touch with our team today.

 

 

 

References

McKinsey & Company, 2019: Organizational culture in mergers: Addressing the unseen forces

Harvard Business Review, 2011: The Big Idea: The New M&A Playbook. by Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck