(Written by me for the Professional Marketing Forum's monthly magazine; published May, 2005)
Competitive forces have been driving consolidation among Professional Services firms over the past five years. According to Hildebrandt International, there were 35 completed law firm mergers and acquisitions in 2003, which was down from the 55 transactions in 2002. While the days of the smaller firm or sole practitioner are not over, it has become increasingly difficult for them to compete with larger firms that offer a host of services.
While faster than organic growth, an acquisition strategy has to be carefully managed before and after the transaction to reap synergies and cost savings. According to Mercer Management, nearly one-half of all mergers under perform. One of the primary reasons that merged entities do not live up to expectations is brand mismanagement. Of all the assets exchanged during a transaction, one of the most important is the corporate brand. Oftentimes, brand opportunities are missed entirely, not realized or underleveraged.
A merger represents a new opportunity to create a compelling vision that is understood and to capture value not present prior to the transaction. It also represents a chance to build a new brand or leverage the strengths of the existing brands. This is where marketing can take a lead role in the M&A process and take a seat at the deal making table.
Early Involvement
Pam Pyrc
is the Director of Marketing at LeMaster & Daniels, a Spokane-based accounting firm that recently acquired another CPA firm in Boise
,
Idaho
. According to Pam, “Marketing should be involved during the due diligence process well before the papers are signed.” Pam and her team helped to ensure that the seller was a good strategic fit by assessing its culture, analyzing its client base and industry specialties and determining what level of brand awareness it had in the Boise
marketplace.
Once a merger partner has been identified, there is always a possibility that the word will get out before a letter of intent is signed. It is important that both firms have one spokesperson so that the message communicated to the media is consistent. The firms should prepare joint press releases that are ready for distribution if the merger news should leak. If the merger fails or dissolves, the same contingencies should be made.
Client & Employee Communication
Once the deal has closed, the role of marketing really kicks into high gear. Clients and employees typically worry about how the transaction with impact them. Clients may feel insecure about losing their personal contact, dropping service levels and rising fees. Employees may worry about losing valuable client relationships or their jobs. Marketers need to drive frequent and consistent communications to clients and employees. The marketing department needs to encourage Partners and associates to schedule informal discussions with clients. It is critical for clients to clearly understand how the merger will benefit them. Marketing also needs to reassure employees and explain how the merger will impact their careers.
Shawn McGregor
is the Director of Marketing at Horne LLP, a 200 professional accounting firm with nine offices. He is very experienced in the acquisition process having been through seven transactions in the past four and a half years at Horne. Shawn’s department executes an internal communication program after each transaction, which includes:
∆ Issuing a press release through the employee Intranet
∆ Posting the names and pictures of the new employees on the employee Intranet
∆ Planning for the CEO to deliver a “State of the Firm” address to all employees
He also expressed that it is important for the marketing staff to have a presence at the selling firm as soon as possible to answer any questions or address concerns face-to-face. LeMaster & Daniel hosts non-traditional orientations for the employees in its new offices, which includes a speech from the CEO, clips from the movie Miracle and a few hours of laser tag. Each LeMaster & Daniel office is responsible for sending the new office a “welcome” gift. Some of the surprises sent to its Boise
office included 15 minute chair massages and candy bouquets.
Corporate Name
Aside from business conflicts, one of the most common reasons sited for a failed merger is disagreement over the firm name. For many companies, especially family run enterprises, it is an emotional issue, as the name evokes pride and history. It is critical, however, that the corporate name be chosen based on the strategic direction of the firm.
During a merger, there are really three naming options: leave the acquired firm’s name the same, give the selling firm the buyer’s name at closing or allow for a period of transition to shift the old name to the buyer’s organization and identity.
On February 9, 2005
, it was announced that one of the nation’s largest law firms will be created with the merger of east-coast based Shaw Pittman LLP and west -coast based Pillsbury Winthrop LLP. The combined firm will initially be called Pillsbury Winthrop Shaw Pittman LLP. It is anticipated that after Pillsbury Winthrop achieves greater brand recognition on the east-coast, Shaw Pittman will be dropped from the name.
When Heller Ehrman, a complex litigation law firm with over 700 professionals, acquired the technology focused Venture Law Group, a sub-brand was created called Heller Ehrman Venture Law Group. John Buchanan, Director of Communications at Heller Ehrman, explained, “The decision to sub-brand was because of the brand equity that the Venture Law Group had in their respective market.” According to John, Heller Ehrman is the only law firm that he is aware of with a sub-brand.
Brand Identity
When Heller Ehrman acquired the Venture Law Group, the firm went from being predominately a complex litigation firm to a company that does a fair amount of corporate work. With this change in strategic direction, Heller Ehrman’s brand identity, advertising campaign, printed collateral and Web site no longer fit.
John Buchanan worked with an outside agency to help re-brand the firm. According to John, “If I could offer one piece of advice to marketing professionals going through the merger process it would be to immediately hire a good third party marketing company to help build a solid brand foundation from the start. It is money well spent.” A relevant new or updated visual brand identity states a company’s commitment to change and should embody the core values of the new organization.
Brand Awareness
The branding opportunities offered by a merger are tremendous. People are paying attention. Employees are anxious about their futures. The financial community wants to know how the business will grow. Customers are watching and competitors are too.
According to Shawn McGregor
, the first 90 days after an acquisition are the most critical in building brand awareness, especially where the buyer has little to no brand recognition. After each acquisition, Horne LLP does an aggressive marketing push, which includes public relations, advertising, direct mail and telemarketing. Sometimes it makes sense to partner with a third party marketing agency in the seller’s marketplace as it understands the local business climate.
In Summary
The way a brand is managed through a merger can tip the scale between being a successful or unsuccessful transaction. Marketers are increasingly playing an active role and assuming responsibility for decisions related to the brand, such as the new corporate name and brand identity. They are also responsible for communicating the benefits of the transaction to important stakeholders such as clients and employees.
Marketing professionals who are going through the merger process for the first time should reach out to experienced peers, who have developed checklists and best practices. Trade association discussion lists make it easy to identify professionals who have been through the process. Also, certain third party marketing agencies specialize in merger brand management.
