According to the Global Rebrand and Architecture Tracker study (GReAT™) carried out by the international consulting firm Brand Company, 56% of mergers between companies in which it is decided not to change the trademark cause serious damage to the business.
The sectors that benefit most from the name change are pharmaceuticals, telecommunications and technology. In contrast, banking is the sector most harmed by brand changes, as it seriously affects customer loyalty.
The report was produced after analysing 3,000 mergers over the last five years. It shows that almost 80% of operations are not rebranded, but rebranding reduces the risk of the operation by more than 50% and generates more value by improving the integration of companies.
According to the words of the Technical Director Alex Haigh facilitated by the company in a press release: “Our analysis not only shows the importance of this decision but also how much it can impact the result of the resulting business turnover”.
The change of name generates different results depending on the sector. In the pharmaceutical sector, they are usually very successful as the acquired brands are usually weaker than the buyers. The opposite is the case in banking, a sector in which there have been many mergers and acquisitions in Spain in recent years.
Brand changes are not always advisable
Examples of brand changes are the creation of Bankia or the disappearance of Banco Popular after the purchase of the entity by Banco Santander in 2018.
The report shows that only 21% of transactions are rebranded, although the larger the transaction, the more likely it is to be rebranded. By sector, pharmaceuticals and telecommunications are the most prolific in terms of acquisitions involving a change of name.
This will occur as long as the brand is not too strong as in the case of Whatsapp, McAfee or LinkedIn, where a change might have been of concern to customers. An example of the opposite case is Euskaltel. After reaching an agreement with Virgin Mobile, it has announced its plan to launch itself into the national market. To do so, it will use the Virgin Telco brand.
Agroman’s change of brand is one of the most striking in recent times. After 93 years of history, Ferrovial has decided to retire the brand, which is now called Ferrovial Construcción. In the food sector we have the example of Mahou, which has acquired brands such as San Miguel and Alhambra in recent years, maintaining the three beers as distinct brands, without imposing its own name.
In the world of luxury, commercial brands carry so much weight that a change would be detrimental to their image. An example of this is the purchase of Loewe by the Louis Vuitton group, which has maintained the brand.
This French company owns Christian Dior, Fendi, Givenchy, Kenzo, Marc Jacobs, Tag Heuer, Bvlgary, Möet&Chandon and Dom Pérignon. Recently it closed the acquisition of Tiffany jewelry stores for 14.7 billion euros. In none of these operations was it decided to change the trade name.
In summary, the important decision to change the brand after a merger depends on several factors. While it is true that in a large part of the operations the change is beneficial, there are industries in which it is not an advisable option. It is also not an option to evaluate if the brand is very powerful, since the client does not associate all the values achieved by the original brand with the new one, generating distrust and uneasiness.