The urge to merge among companies has increased in recent years. High-profile deals like Bank of America Corp.’s $36 billion acquisition of credit-card issuer MBNA Corp. might have garnered the front-page headlines, but such blockbusters represent just a small proportion of overall activity. In fact, the total worldwide value of mergers and acquisitions topped $2.7 trillion in 2005, a 38% increase over the previous year. And based on current levels of deal making, that figure is expected to rise again in 2006, with further annual increases of 10% to 15% estimated beyond that. But the track record of M&As has hardly been stellar: More often than not, such deals end up destroying, instead of creating value for the companies involved.
A big part of the problem is that of all the myriad complex decisions that senior executives make before and during a merger, one is mandatory and critical but often given short shrift: the branding of the new corporate entity. That can be a huge blunder. With no solid brand platform to work from, company integration will often be mismanaged, and communications to key constituencies will necessarily suffer. In the worst of situations, the relationship between the two organizations becomes contentious; promised synergies remain elusive; employees become distrustful and disgruntled; and customers grow cynical and dissatisfied.
It doesn’t have to be that way. When handled properly,... To read the complete article, login or sign-up using the form below.
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