Why B2B M&A Needs Marketers Mergers and acquisitions most often fail–but marketers can help

Kathy Seegebrecht – VP Corporate Marketing at UL

Kathy Seegebrecht, VP Corporate Marketing, UL, with Bob Domenz, CEO, Avenue

M&A is more important than ever in B2B. 2015 saw global B2B M&A activity at an all time high; a mid-year 2016 report showed that M&A deal flow is still increasing; and Gallup reports that a majority of B2B companies are using mergers and acquisitions as a key part of their growth strategy.

With that in mind (and also because I’ve helped B2B organizations with more merger integrations than I can count over the last couple of decades) my ears perked up when a recent conversation with Kathy Seegebrecht, VP of Corporate Marketing at UL, turned to the topic of what senior marketers can do to make mergers work. This is an especially important need and opportunity for marketers to address, given that the failure rate of mergers is persistently high.

Bob Domenz: For a company like yours that’s using mergers and acquisitions as a fundamental growth strategy, what advice would you provide to a marketer about how to position marketing to best affect M&A?

Kathy Seegebrecht: There are some really important things that marketing can do. First of all, you want to make sure you’re acquiring in the right area or marketplace geography, and also effectively integrating those new companies and brands into your organization.

So, upfront, hopefully, you’ve got the opportunity to:

  • Provide market insights trends
  • Identify where the opportunities are–where your company
    should be looking to acquire
  • Create opportunities to “plus” the acquisition, quickly

So that’s the upfront, informing part. And after you’ve identified a merger and acquisition target and you do bring them in, then there are several things that the marketing organization can do to facilitate success.

You can tell your brand story–and tell it very strongly.  Why should that newly acquired organization want to transition to your brand, assuming you’re not a house of brands?

Why should that newly acquired organization want to transition to your brand?

Our goal is to be a branded house, so we like to bring them in and migrate them to the UL brand. We believe they’re an important new part of the family, and we want them to feel that way, too. However, people get very fond of their proprietary brand, as it’s often a family-owned business and they’ve personally built the brand. So you’ve got an uphill battle, requiring you to tell your story powerfully, to convince them how and why the brand that you have is important and why they should want to migrate over to it.

Then there’s the communications and the PR plan that you need to put around the merger to make it effective, to make it known in the marketplace. And beyond telling your story internally and externally, you’ve got the challenge of integrating sales and marketing organizations.

Bob: You’ve spoken elsewhere about aligning sales and marketing as being one of your real passions. Do you find that M&A provides special challenges in that effort for alignment and optimization of the two functions?

Kathy: When you acquire a company or you merge with another company, they’re often on different CRM systems and different sales and marketing systems, et cetera. So you have to help align those things without changing everything as soon as you acquire them.

It pays to understand what benefits they get from their current systems and what they might give up if they change—or all the benefits that they might get after changing. So putting a process in place is really important from a sales and marketing function perspective.

You have to help align sales and marketing without changing everything as soon as you acquire them.

But also it’s about teaching our salespeople and our marketers about what these new companies that we’ve acquired do—we call it internally selling UL to UL—so that you can go out and effectively represent the company to customers, clients and stakeholders and really talk about the depth and breadth of the capabilities that we offer.

 Bob: What are some of the challenges in merging acquisitions with the UL brand?

Kathy: It’s the transition phase. As I said, you have to help them understand what the UL brand stands for.  But you also have to work at understanding what their brand stands for.

Then it’s a question of, “How do we transition that brand to UL in the marketplace… or do we?”  There are certainly exceptions where we don’t transition it, where we maintain the acquired brand because it’s very important for the market or the industry or the region that they serve. But the majority of the time we want to migrate that brand, primarily because you’ve got a limited amount of spend, and we have a lot of equity in the UL brand.

We’re over 100 years old as a company, people know UL, they know what it stands for. UL is a trusted brand, so it adds a lot, we believe, to the offerings in the marketplace. To keep an acquisition as a separate brand is difficult. It fragments not only our spend but it also fragments exposure to consumers and undercuts relevance and loyalty to the brand.

So it’s a process, it’s a journey. People within the acquired organizations do not necessarily always want to transition their brands, but many that we acquire do. They’re very happy to be acquired by UL and love the brand, and so they want to start using it as soon as possible. So we have to manage those transitions. And then there’s the matter of project planning…materials…presentations…collateral. It’s a process.

What if you’re not a Branded House?

I very much appreciated Kathy’s insights into what it takes to effectively integrate acquisitions into a major Branded House such as UL. But what if you are acquiring brands within a House of Brands structure? Or what if you are purely in merger mode and building an entirely new house? There are several critical roles that a senior B2B marketer can play in helping a merger succeed, falling under three main categories that are particularly applicable to the post-merger integration process:

Aligning cultures: Is the mission of the newly combined cultures well-understood (and meaningful) to employees and customers alike? Is your vision of the road ahead clear enough to calm stakeholder fears and provide a clear path forward? Have you defined and communicated the values that can keep you on that path? Do you and all stakeholders know—and care about—your purpose? A marketer’s skills are well-suited to exploring, and answering, these questions.

Leveraging brand: Does the new combination of entities provide the chance to enhance your positioning, value proposition and messaging? Is the new product mix easily understood in the marketplace, or is a new brand architecture required to make sure it is? Is the leadership team experienced with the special demands, internally and externally, of communicating through a merger? Once again, marketing is best suited to surfacing potential problems here and providing solutions.

Empowering sales: Do you know how to identify, and reassure, customers who are at risk? Do your sales forces have complementary philosophies, management styles, skill sets and systems? Do all sales people understand the combined product portfolio, and have they been trained and equipped to sell it? Do sales and customer-facing employees know how to communicate the benefits of the merger to potentially nervous customers? If marketing aligns closely with sales, all of these questions can be answered and issues resolved.

Yes, mergers have miserable failure rates, but they don’t have to. Skilled, strategically-oriented, senior-level marketers can make the difference.

About Kathy Seegebrecht: Kathy is the Vice President of Corporate Marketing for UL, the global independent safety science company.

About Bob Domenz: Bob is CEO of Avenue, the B2B marketing strategy and activation firm, Founder and Executive Director of the B2B Brand Council, and he holds the CM&AI (Certified Merger & Acquisition Integration) designation.  For those in the middle of M&A, he’s created The Merger Integration Accelerator Kit.