Wednesday, January 13, 2010

Managing acquisitions: How the big boys do it

Ever have a challenging acquisition to manage? You have a big, powerful company with high brand visibility – and you buy another big, powerful company with high visibility. Now you face a dilemma that goes back to the time when Rome conquered Greece. Do we just call it Roman Empire? Or do we say, "Greece, Brought to you by the Roman Empire?" Or do we call it Greco-Roman-Ville?

Now see, the really smart guys – the financial firms that rule the capital markets – hire the best consultants to do it right. So, let's take the example of Bank of America acquiring Merrill Lynch (oh, you remember the details... The visionary heads of the two companies were blind-folded and put in a swimming-pool drained of water and told to flounder around until they bumped into someone else... something like that.) Now, how should they visually merge these two notorious brands?

Voila! I just received an analyst report... and here's the solution: You put one name on top of the other name – like bunk beds! And look, there's a little blankie over on the right.

How much do you think they paid for this? Nothing wrong with it. Just... arbitrary. (I hope not much.)



Weber Marketing Group said...
This comment has been removed by the author.
Jeffry Pilcher said...

Remember AOL Time Warner? Blech.

This is a common naming strategy when two established brands merge. It's also usually temporary. The acquired brand frequently disappears after things calm down.

This type of naming solution is seen in the financial industry more often than other because the acquiring financial firm want the customers of the acquired to feel some level of stability. If you change the name too quickly, people are more apt to say things like, "This place used to be great when it was [Brand X] but now that it's [Brand Y] everything has gone to shit..." No, preserving the name does not diffuse this problem entirely. But changing it quickly certainly compounds people's negative reactions.

Regarding the logo, this is how BofA treats all of its divisions -- BofA up top, division down below.

As far as the "Merrill Lynch" name goes, I'd keep it if I was BofA. The brand has more equity than liabilities. ML didn't get that beat-up through the crisis -- no real big scandals.

I'm not sure I agree with the characterization of BofA as a "notorious brand." They were a relatively healthy financial institution who (1) was asked to buy ML by the Fed, and (2) had wanted to acquire ML for a long time anyway.

Note: BofA never asked for TARP money. It was foisted on them, almost like a dowry for acquiring ML.

The BofA+ML acquisition wasn't a mishmash of arbitrary brands. BofA has been strategically expanding its markets for some time. In the 90s, they acquired MBNA so they could get into the credit card business. They recently acquired Countrywide at a steep discount in order to compete with other big home lending players like Wells Fargo. And their acquisition of ML in a federally-subsidized and heavily discounted "emergency marriage" is a similarly strategic move -- not a knee-jerk reaction.

brandsinger said...

Well gee, thanks for the lecture, Jeffry. I guess I should apologize for being less than reverent toward noble religions like Merrill Lynch -- which has over the years been a front-and-center pillager of clients and markets. Were you awake during the Enron scandal? Do you remember anything about Merrill's hawking of tech-boom stocks while sniggering behind the scenes that the issuers weren't likely to survive the next breeze?

How about loosening your tie, grabbing a brewsky and getting into the spirit of the brandsinger site. This is not a f---g church. We call em as we sees em. Merrill Lynch was raked over and raped by its own CEO -- remember Stan O'Neal? He of the $160 million exit bonus after wrecking the company? That's hardly a company with "no big scandals."

Derek said...

Here in Canada, we had Toronto Dominion Bank merge with Canada Trust, but Toronto Dominion was already in the process of reducing its name to simply "TD." So it became "TD Canada Trust." Not AS bad, but still rough.

I suspect that the Canada Trust end, which is definitely the weaker, will slowly die over a decade or two, until, through a series of small decisions that culminate into a convenient name change, we're back to just "TD."

I lament the loss of the "Dominion" though...such a strong word.

brandsinger said...

Thanks, Derek. I also lament the loss of "Dominion" and "Imperial" and the other colorful and noble old Canadian banking names. I wrote a little blog-essay on that here:

Cheers - Claude

mm said...

At least they haven't settled on an acronym using all the initials just yet.

In a few years we'll have "BoAML: The bank you can trust." With a slick new logo.

A few years later they will make the change to all lowercase to be more friendly and approachable. "Boaml: Your neighborhood bank." With new typography set in a rounded sans serif font.

Eventually they will drop the "o" and the "l" and become "Bam! The bank for kids." With branding ties to Nickelodeon.

I for one, look forward to this brand evolution...

brandsinger said...

Stop! Too funny!
Thanks, mm... I'm still laughing... still laughing... How will I get back to work!
Your parody is too good.
You must be a professional comedy writer -- no, not that, your material is much better.


Thomas said...

Then there are those times when one bank buys another and assumes that banks name and drops their own all together. Case in point was First Union and Wachovia.

First Union had the cash, but a bad reputation. Wachovia had the reputation, but financial issues. So, First Union buys Wachovia and suddenly becomes, "Wachovia" Voila!! A new bank is formed...sort of.

The only logo element they did combine was the use of First Union's green with Wachovia's blue. Apparently in this case green stood for cash while blue was the result of Wachovia having their balls stuck in a vice.

brandsinger said...

Ha! Thanks, Thomas.
Another example was Chemical Bank buying Chase. Yes, few remember that the Chemical team was better, their bank sounder. But the Chase name was too good to pass up. So (to use our term of the day) Voila - you have Chase.
(Of course, later came the purchase of JP Morgan and -- voila -- JP Morgan Chase.)


Derek said...

Oh shoot! I forgot you wrote that post about bank names! How embarrassing. That post was actually where I fell in love with the word "Dominion" again.

brandsinger said...

Ha! - that's great, Derek. Thanks.