Merger & acquisition series: Part 2/11 – Choosing the right name during an M&A
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Your name strategy should reflect your business strategy
During M&A, one of the first questions on people’s minds is “What are we going to name it?”. Naming is often one of the most emotional and political challenges during the M&A rebrand process. And, it’s also one of the first major signals to external audiences, making it critical to choose a name that sends the right message.
The name you choose is a strong signal for the vision of the organization, and lets people know what they can expect as a result of the M&A. It can send a message of total transformation or business as usual—and can even convey who is “taking over” who. When handled correctly, naming can be a huge opportunity. The right moniker can point the organization in a fresh new direction and serve as a rallying cry that binds groups together under a shared identity.
Learn More: Breaking Through the Naming Noise
However, despite its strategic significance, it’s not uncommon for the name to be decided based on emotions and legacy attachments, with little regard to what it says about the future of the organization. As a leader, it will be up to you to make sure big personalities don’t get in the way of selecting a name that will best set your new organization up for success. To do so, you’ll have to keep the conversation calm and the decision-making strategic. You must ensure leadership understands the importance and impact of the name decision, and help them resist the urge to make a decision before understanding what is best for the strategy.
In this post, we’ve outlined the various name strategies and shared some of the top pros and cons of each direction. Like it or not, the decisions you make at this point will set the tone for the rest of the process and establish expectations for the change overall. And with names, you often only get one shot.
What are the different name directions?
At the highest level, there are really only three categories for name options during M&A – leverage an existing name, create a combined name, or develop a completely new name. Of course, there are subtle nuances and variations within these categories, some of which we will address below.
Leverage an existing name
Naming is tough, so if you have a great name that you already own and reflects the future vision of the company, then that very well may be your best bet. This happens all the time in acquisition scenarios when there is a clear lead, and if the acquisition is a proof point to a story that the lead brand already stands for. Or perhaps there are other acquisitions on the horizon, and you need to put all the pieces together before you can tell your bigger story. Additionally, the plan might be to maintain the acquired brand as a subsidiary or separate entity without impacting the enterprise brand. There are hundreds of variations, but in general if the acquisition does not significantly shift the narrative or value proposition, then a name change is likely unnecessary.
A great example of this is Fiserv’s acquisition of FirstData. Fiserv is a global leader in payments and fintech, and is first across many categories. And with the aspiration to “move money and information in a way that moves the world,” the Fiserv brand can stretch to reflect the combined organization today and in the future. This is why First Data is becoming Fiserv.
However, this becomes a bit more complex in merger scenarios. Leveraging one of the names can send a message that one company is taking over the other, which can be a difficult perception to overcome both internally and externally. The potential cultural fallout from a decision like this may be enough to eliminate this name approach all together.
Further, it’s important to understand that when a name is maintained, the message being sent is “business as usual”. By sticking with an existing name, it is harder to break from legacy perceptions. Before making this call, you must be certain that the name has data-backed equity, and that it will be able to live up to the organization’s future vision.
However, there are other tools besides name to signal change. While a new name is a more explicit and immediate signal of change, you can still shift perceptions with visual expression. For example, when IFF, the global leader in flavors and fragrances, acquired Frutarom, it provided an opportunity for the traditionally more corporate IFF to adopt a more natural and organic-focused identity. Given the huge equity associated with the IFF name, and because customers believed that the organization could evolve to be more natural, they maintained the name but evolved the logo to signal a healthier, organic story.
Create a combined name
The combined name is a fairly common outcome, especially when it’s a merger of equals. It’s an easy, equitable approach that can help nurture an early relationship, though it risks resulting in a less-than-strategic name.
The positives with this approach are maintaining legacy equity and minimizing potential business disruption. But that equity has to be very strong with both brands, and in distinct markets, to rationalize keeping both names. Alternatively, the strategy can allow both legacy brands to live at a product level, so the corporate name becomes more of a holding company to house multiple strong brands underneath.
ExxonMobil and LVMH are great examples here, where the combined names act as an umbrella for various separate entities and businesses. And while these brands can operate as much more than a holding company, they originally represented the coming together of multiple brands that would continue to operate distinctly from the corporate brand.
In this scenario, the message you are sending is that this is a business transaction with an emphasis on becoming bigger and combining capabilities, rather than representing a transformation. If your goal is to tell a more transformative story, your best bet is likely a new name. Otherwise, you are going to need a fairly revolutionary logo, design, messaging and experience to establish a significant signal of change.
The combined name strategy also carries a number of additional challenges to keep in mind. Tactically, it often creates a long, complex name that will have to be managed across many touchpoints. Shorter names are more effective across many criteria, from increasing memorability to minimizing acronym-ization and maximizing presence in signage and sponsorships, among many others. Additionally, what does this mean for potential future M&A? You can’t just keep slamming names together, so be mindful of your future growth strategy.
Legacy names also risk carrying forward negative or limiting associations that can make growth or expansion more difficult. Naming is a rare opportunity to signal who you are to the world, and ideally you have a cohesive brand that all works together to create and own that narrative. However, just combining two very different legacy names rarely results in a name that tells the new, future-focused story you want.
Lastly, one of the biggest barriers to this name strategy is cultural. By maintaining both legacy names, you are increasing the likelihood that cultures won’t integrate and siloes will be created. An overwhelming majority of the M&As we work on have “one culture” at or near the top of their goals. If you ultimately want to have a unified culture, a combined name by nature fights against that objective.
Create a new name
A new name is the best way to signal transformation. If the M&A results in a significant shift in your story and offering—a true 1+1=3 scenario—then an entirely new name may be the bold move needed to ensure audiences understand the new direction.
Embracing a new name is understandably a major leap for many leaders. Often, it can feel like throwing decades of built up equity and relationships out the door, and having to start from scratch. While in some cases, that might be accurate, resulting in too much business disruption to be worth it, the truth is that names often mean more to brands than to audiences In the majority of scenarios where we have done name testing, data shows that customers do not have strong attachment to the name, and that changing it would cause little to no disruption. Customers often cite caring more about a direct personal relationship (e.g. with a sales rep), the specific services and/or the way they are delivered, or what the organization stands for.
This is where research is critical to understanding the best name strategy decision. Data can give you confidence to change the name knowing that disruption will be minimal, and can help you understand and address concerns or expectations that customers have as a result of the M&A. And of course, a strong communications effort can bring people along the journey further, helping to reduce disruption and even creating advocates along the way.
Learn More: 11 Tips for Creating a New Brand Name
Additionally, adopting a new name does not mean the legacy names have to go away. You may even want to retain them for competitive purposes. By shifting the role of those names from being a “who” (company you work for) to a “what” (what you do), you can send a bold signal while also maintaining legacy equity. This does have to be managed carefully based on your overarching objectives. As people often latch on to legacy brands, maintaining names can pose challenges for creating a unified culture.
HonorHealth is a great example of a successful rename while maintaining legacy equity. When Scottsdale Health Care and John C. Lincoln Health Network joined, they initially wanted to maintain their 140-year history by naming the new entity Scottsdale Lincoln Health Network. However, this name strategy would miss an opportunity to send a message to the marketplace that there is a better way to provide personalized, accessible care to communities. Additionally, the brands needed to unify their cultures in order to deliver on their integrated, coordinated vision for care.
A fresh, new name would better position them to achieve objectives, and data showed that the communities would be supportive of a name change. While HonorHealth became the new brand that brought the organization together, they maintained their heritage in individual hospital naming (e.g. John C. Lincoln Medical Center). Now, HonorHealth has gained significant awareness and market share, and is the leader in Arizona for personalized care across the continuum.
A comment we hear quite a bit is that there isn’t enough budget for a name change, with signage often being the biggest consideration. It is important to remember that unless you are just adopting an existing name and identity, everything has to change anyway, so from a cost standpoint a new name is actually a similar investment.
Before making such a big decision, you absolutely need to fully understand the external equity and impact of a name change. As mentioned previously, the most frequently underestimated variable is internal culture. If having a unified culture is an important objective as a result of the M&A, especially in mergers of equals, you should strongly consider creating a shared new name.
When Ensco and Rowan merged to form the leading offshore drilling company in the world, they initially planned to name the combined entity EnscoRowan. However, leadership realized the importance of creating a unified culture, they decided to retire the legacy names so that everyone could move forward together, as one. They ultimately chose the new name Valaris, signifying strength and valor, creating a strong and cohesive story that reflected their mantra of Boldly First, which also formed the foundation of a re-energized culture unified toward common objectives.
M&A’s by nature are complex and nuanced, and every deal is unique. This is why naming in these scenarios is highly complex, yet so critical to get right. While there isn’t a surefire formula or checklist for picking the right name approach, there are some processes best practices to help ensure the best outcome.
When embarking on an M&A naming process, implement the following steps to keep the decision-making strategic and the debate as objective as possible.
- Educate key leaders on the importance of the name decision:
Leaders are often attached to the legacy identities they’ve helped nurture and create.Resist the urge to commit to a name too early, and take the time to educate everyone involved. Help leadership understand the potential impact and outcomes behind naming directions, so that everyone can make the most informed, strategic decisions possible.
- Define your M&A rebrand objectives:
These objectives should serve as your north star when making any big branding decisions—name and beyond. Define them, understand them, decide by them. Before selecting a name, make sure the name meets your rebrand objectives and future vision. Will it help your brand adapt, stretch, and grow in your desired direction in the future?
- Gather data to understand legacy strengths, perceptions and value:
Conducting research can add an objective, external perspective to the debate, tempering emotions and helping the facts shine.
- Make culture objectives a top consideration:
Name strategy can have a significant impact on culture during M&A, so be sure to consider how changes will impact—or not impact—your people. If one of your key objectives is to unify cultures under a shared brand, a new name can help bring everyone together.
- Name may be your first question. But what follows will make or break the rebrand:
Don’t let the excitement of selecting a direction cloud your vision—a name is just a name until you build a solid story around it.
Naming is an undeniably huge step for any M&A rebrand—but it’s only the beginning. Stay tuned for the next installment of our M&A Rebrand Playbook, where we’ll explore the challenges and pressures that come with a close date, and how to avoid missing out on critical opportunities to set your brand up for success. In the meantime, never underestimate the power of a name!