The film Shakespeare In Love shows the great bard grappling with “Romeo and Ethel the Pirate’s Daughter”, eventually whittling down the name for this bloody failure of a corporate merger to the more catchy Romeo and Juliet.
But some of the unwieldy identities spawned by mergers and acquisitions in the past decade suggest that, given the choice, most businesses would opt for the first title, not the second.
Jonathan Knowles, director at Wolff Olins, describes three main options in post-merger corporate identity: “The most common is a straight agglomeration of the names, and that seems to be the option most people prefer.” The message here is “great brands, great future; largely by dint of the resulting cost savings”, he explains. This is especially common in financial services and other organisations in the business to business rather than consumer service sector. The Price- waterhouseCoopers identity is a case in point.
Where the coming together of the two components of the new organisation is presented as being more of an acquisition or an “unequal” merger, one of the two names is likely to subsume the overall identity, says Knowles. But this need not necessarily follow the macho logic of boardroom buyouts, where the lesser player is always eclipsed by the more dominant. The 1996 merger of Chemical Bank and Chase Manhattan, where the decision was made to keep the stronger Chase brand for the resulting organisation is a prime example, explains Knowles.
The third option is the creation of a completely new name. This can, at one extreme, be what Knowles describes as the “plain vanilla” choice, which blends obvious elements of the two existing identities. Or at the opposite end of the spectrum, it could be a radical departure which aims to add to the sum of the parts. Wolff Olins’ work on the Diageo identity falls squarely into the latter category, says Knowles.
The creation of any company as large as Diageo from the merger of Guinness and GrandMet is going to make waves long after the deal is signed and shareholders placated. The group’s latest move was last year’s rebranding of the merged United Distillers and International Distillers and Vintners, as United Distillers & Vintners (UDV). It might not appear to be a particularly bold rebranding compared with the more controversial naming of the holding company, but the different choices themselves reflect contrasting priorities and audiences, says Diageo.
“For the Diageo name, there were our employees to consider, both in the holding company and in our four businesses,” says a spokesman for the group. “The name was an important signal that the company was changing and creating something new, rather than being just an amalgamation of two existing companies. A new name and identity can be © a useful kick-start for a process of cultural change.”
But at the same time, the company warns, a simple name change can never be a substitute for more thorough cultural adjustment.
Investors were the other major audience for the Diageo name. Initial reactions were famously sceptical, if not derisive, but since then, time and more material considerations appear to have worked their magic on shareholder acceptance.
With 17,000 employees spread around operations in 200 markets, the introduction of the UDV identity had to be more gradual. But, again, it was a signal that the merger at group level was filtering down to all levels of the organisation.
“The biggest challenge with both names was trying to create something which did not fight with the consumer brands,” says a Diageo spokesman. Despite this concern, the aim with the holding company name was to inject some of the emotional attachment to the group and its brands that a more corporate-sounding name would not convey.
With acquisitions and mergers, the strategic implications of corporate identity changes are not always thought through. This may be because time is short, or because the easiest option, bruising the fewest egos, is often the blandest. “Most of these mergers take place on the back of sound business sense, but the issue of identity is often an afterthought,” explains Knowles.
“People are very attached to their own company identity, and when something is billed as a merger you have to be aware that simply dropping a name can be a slap in the face for people in that organisation.”
However, says Chris Ludlow, partner at identity consultants Henrion Ludlow & Schmidt, there is no such thing as an equal merger. “There will always be one partner which is predominant, and naming decisions often reflect the internal politics and power structure,” he says. Whether or not the name of an acquired company survives at all depends purely on whether the value is in the name itself, in non-corporate brands or in the company’s more tangible assets.
Mergers remain front page business news. Of the 1,600 company name changes recorded in the US in 1997, over 700 were associated with mergers or acquisitions. But the way mergers take place does seem to have changed. According to Clare Fuller, director of consultancy at Bamber Forsyth, a quarter of deals in the US during the Eighties were hostile, while now almost all are mutually agreed.
Fuller predicts that this non-hostile tendency will contribute to a greater amount of thought going into the resulting new identity. “Both parties are more likely to collaborate on the issue of naming, and reason more carefully about the choice,” says Fuller.
She cites research suggesting that two-thirds of mergers fail to expand business, meaning that managers are under pressure to deliver added value through, or with the help of, the new identity. “They are under clear scrutiny and cannot afford to make mistakes, even if this means opting for the less obvious choice,” Fuller adds.
Bamber Forsyth worked on the new identities of the Uniqema and Synetix businesses acquired by ICI. Even though Unichema was the junior partner in the merged surfactants business, ICI decided to use its name, subtly tailored with a “q for quality”, says Fuller.
Synetix brings together five different catalyst businesses, and so a completely new name was the favoured option. The name echoes “synectics” (group problem solving), while the final “x” adds a technical feel and makes the name more easily registerable.
Whereas changes to the name of the holding company need not have a huge impact on the majority of the workforce, in other kinds of company structure, the loss of a name can resonate for years after the event.
Interbrand Newell & Sorrell helped to develop the new PricewaterhouseCoopers identity, where the decision to keep the relatively long name (despite losing “Lybrand”) was taken for sound internal reasons, says Interbrand group deputy chairman Tom Blackett. “It is a ‘people’ business, so the name has enormous implications in terms of recruiting the right people. It also has huge people importance for the clients,” he adds.
Interbrand notes with horror that, according to the consulting arm of KPMG, 90 per cent of all mergers and acquisitions involving European companies are not accompanied by a marketing or communications review. With the PricewaterhouseCoopers identity, Blackett believes, the graphic treatment of the name is almost as important as the name itself. “There is a visual identity that people will recognise,” he says. “The actual shape of the name will become a visual mnemonic.” A similar memory aid had been incorporated into the Bowater umbrella identity.
The choice of a completely new name can also reflect relative stature in the market, says Blackett.
For Ciba-Geigy and Sandoz, he suggests, there was more to be gained with a bold move towards the Novartis identity than in sticking with either of the old names or a hybrid of the two.
Changing a group name can be justified for legal and corporate reputation reasons, especially in the case of a demerger. For example, while Zeneca was keen to establish a fresh identity for very positive reasons, as Blackett points out, with the name ICI Biosciences it might have been associated with aspects of the old business which it preferred to distance itself from.
No doubt, there may be sound psychological and time reasons for using well-tried names. But whatever the disincentives for a complete change of identity post-merger, it can signal a new beginning in the Diageo mould. The alternative amalgam may simply be indicative of two cultures colliding, says Briget Ruffell, managing director of branding consultancy Corporate Edge.
A new name can also help emphasise a group’s global aspirations, says Ruffell, and avoid sounding too parochial. The consultancy developed Glanbia as the name for the merged Avonmore Waterford group.
“We were able to create a name that the majority of its larger international customers saw as having no obvious meaning. But the employees in small co-operative farms understood it to be Irish for ‘good food’,” she says.
In the end, it seems that whatever linguistic and graphic workouts the new identity is put through, the way it is presented and developed – with regard to all relevant audiences – is almost more important than the name itself. But of course, ultimately, it is the success of the new business which makes the name work, and not vice versa.