Companies spend millions on corporate branding - and with good reason. A strong brand provides pricing power and resilience in the market. The concept of brand power is evolving as companies seek to differentiate, including extending the reach of brand into other key areas like recruiting for talent. In recent decades companies have embraced the value of a strong employment brand. Being known as a company with a strong culture and excellent work environment provides an opportunity to be considered an employer of choice - a huge advantage in the war for talent. A strong employment brand also helps to reinforce an admired corporate brand. And the reverse is also true. Challenges with your employment brand can threaten how customers view your entire organization. The same can be said of an M&A brand. Over the years we have witnessed the power of a positive M&A brand. And yet few companies have deliberately cultivated their M&A brand as a differentiator to potential acquisition targets.
Building a strong M&A brand goes beyond just having a high-flying stock price or a reputation for paying a premium. In fact, M&A brands are often built upon a range of intangible factors, such as a reputation for delivering on promises, investing in the integration of people and processes of the acquired company and treating customers and employees thoughtfully.
In this note, we highlight elements of strong M&A brands that have stood out to us over the years and offer a few practical steps to enhance your own M&A brand.
It Starts with Awareness
Valuation and terms are always top considerations in an M&A transaction, but intangible factors play a significant role in the decision-making process for founders considering a potential acquisition. Founders want to ensure that their customers and employees are in good hands and that their company will have a positive legacy. Awareness of these intangible-yet-important elements of a transaction can go a long way toward elevating an M&A brand. In our work with founders, we have seen plenty of examples where sellers select a buyer who is not the highest bidder. There is great value in being the acquirer of choice.
Clarity & Communication
There is power in having an efficient, specific process that you can communicate to the market of sellers early on. Sending a clear message about the kind of opportunity you are seeking (ideal profile, technology attributes, strategic rationale, etc.) will help your M&A team recognize an opportunity immediately – and helps establish the clout of your M&A brand. Summarizing work you have already done to establish a programmatic M&A approach and an M&A playbook can be leveraged here to great effect.
Building relationships in your market and making yourself accessible and open to conversations is perhaps obvious, but surprisingly lacking. If you want to be acquisitive, offering a clear point of contact for sellers or their representatives and an outline of your acquisition criteria is the minimum. We advise taking a page from the Private Equity world, as these investors are competing for the same acquisition targets and are very good at projecting their interests.
“Sell the Seller”
A potential buyer who approaches interactions with a target with what we refer to as a “Sell the Seller” mindset, stands out in a competitive market. For example, adopt a personalized and thoughtful approach to potential sellers that highlights the strategic benefits of a partnership with the acquiring company. Seek to answer the big question they ask themselves when they take your outreach call – “how do you see these two companies coming together?” Think about how you can communicate the unique benefits you offer to sellers, why this combination would be powerful, and what unique benefits the sellers will gain from partnering with you. Start with the endpoint in mind – exploring why this combination could be attractive from outside in, as each party learns more about the details and true potential and challenges. This is a journey that relies on deep motivation of the two parties.
Establish Consistency in Your M&A Brand
As with any branding, consistency is key to making an impact on a market. For example, recognizing the strengths of your corporate and employment brands, and describing the strategies around these to sellers will reinforce the overall brand value and position you as an acquirer of choice.
Incorporating success stories of previous acquisitions via case studies is a powerful tool as sellers consider their options – much like reading customer reviews. Including a former seller on the deal team will make a very powerful positive impression on other sellers – a real-time reference! If not, creating an executive profile with previous sellers or celebrating previous successful acquisitions can have a similar effect.
Regardless of where you are in your process of building an acquisition program, being mindful of the benefits of a positive M&A brand is an important step to set you up for success as an acquirer.
For a holistic, personalized approach to igniting your company’s growth and innovation via acquisitions, explore Harbor View’s Buy-Side M&A Advisory.
DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.
