When two companies come together in a merger or acquisition, a critical decision is what to name it.
Essentially, there are four alternative approaches, each with pros and cons depending on the situation. Sometimes the decision comes to be at the outset of the deal. Other times it may take years, and twists and turns to get there.
A true merger of equals is a rare thing.
Often, mergers are represented to be “a merger of equals.” But while capabilities may be complementary, and the combination holds the promise of a better company, one party is often the dominant partner. This may be because of its size and breadth, financial strength, current brand equity and/or positioning for the future. Often the name will be that of the acquirer as the dominant party.
Here are some pros and cons of this approach:
There are many examples of this approach, such as United Airlines’ acquisition of Continental, Pfizer’s acquisition of Warner Lambert, and Credit Suisse’s acquisition of First Boston, to name a few.
Surprisingly, this approach is more common than it would seem. Often, this choice is dictated by the relative strength of the acquiree’s brand and/or its ability to better position the combined company for the future.
There are many examples of this approach in branding assignments we’ve handled. One with an interesting backstory is the merger of Morgan Stanley and Dean Witter. While Dean Witter was acquirer, its brokerage business capabilities were not as promising for long-term growth as Morgan Stanley’s investment banking capabilities.
Initially, to ease this “merger of equals,” the adopted brand name was Morgan Stanley Dean Witter (actually the company was Morgan Stanley, Dean Witter and Discover). However, after a relatively brief migration period, the name was changed to Morgan Stanley.
Other examples are Chemical Bank’s acquisition of Chase, and Medalogic’s acquisition of MedScape.
This is a common approach as well. As we see in some of the above examples, this may be a migration strategy towards a singular brand. Other times, it survives as the company name.
Price Waterhouse Coopers (since shortened to PwC) is an example. There’s also, Lyondell Bassell and ConocoPhillips, to name a few
By its nature, a new name signals something new is happening.
This approach eliminates having to decide which of the above approaches will work best. By its nature, it says something new is happening as a result of the merger. However, there are branding risks and execution costs involved.
Some notable examples that we have named are Novartis (the merger of Sandoz and CibaGeigy, FINRA (the merger of NASD and NYSE member regulation), and GenOn (the merger of Reliant Energy and Mirant).
There are internal and external considerations in making these decisions. Sometimes, there are cultural and organizational issues, such as how leadership, employees, and investors of each company will feel about the decision. Other times, there are external issues, such as how the marketplace will respond to the new brand.
So, while naming is not aways as easy a business as appears from the outside, there is always a solution. It just requires a a little creativity, a lot of perseverance, some give and take, and the ability to think beyond deadlines to the long term.
After all, a name is definitely something worth getting right.