How brands can navigate the unpredictable path of mergers and consolidation

With a bumper year for brand consolidation and mergers up ahead, what lessons can marketers learn from the past? Wolff Olins global principal of strategy & innovation Charles Wright explores the M&A bounce caused by Covid

The Covid M&A bounce

After the slide in stock markets following the spread of Covid19 in Q2 of 2020, M&A activity surged back on Wall Street in the second half of last year. Now the enthusiasm has spread to Britain too. 2021 looks set to be a bumper year for M&A on both sides of the Atlantic. And Wall Street itself is leading the way!

The explanation is simple: government stimulus. Interest rates are at an all time low.. Commodity and share prices are soaring. Companies have raised more equity in 2020 than ever before to bolster balance sheets. Combine cheap debt and plentiful equity and an M&A boom results.

Meanwhile, in the real world, the FT carried an eye-catching headline on February 12th announcing the UK suffers biggest drop in economic output in 300 years. For now, M&A is an easier way to grow than conventional organic growth.

Will this M&A boom last? Probably not. Merged companies cannot cost-cut their way to profitable growth. In the same issue of the FT, it was also reported that Kraft Heinz was selling yet another part of its business after a succession of challenges following a merger in 2015. 

The sad truth is that Kraft Heinz is not unusual. The Harvard Business Review once observed that M&A is a mug’s game: typically 70%–90% of acquisitions are abysmal failures. Strong language but it is hard to imagine this current bout of M&A enthusiasm will end differently. If anything, the failure rate may increase: cheap capital leads to pursuit of projects which would be discarded in more normal times.

What’s this got to do with branding?

We are currently getting two types of inquiry related to M&A. The first type of request is to create a brand that makes sense of a merger that happened in the second half of 2020 or is expected to complete soon. The second type is to (re-)brand the rump of a merger from the mid or late 2010s that has not gone to plan.

Our first experience of branding a merger was to create Diageo, when Grand Met and Guinness combined in 1997. Diageo is a rare example of a merger that has worked well. It has out-performed the FTSE 100 by almost five times  since then. Of course, not every merged brand does so well.  

The E.ON brand was created for the merger of two German energy companies. E.ON’s shares are lower now than they were at launch, in large part due to what the German press calls the Energiewende, the shift to low carbon energy supply mandated by federal legislation in 2010.

Brands that stand the test of time 

There is no magic bullet in M&A, and brand is no exception. We don’t claim any kind of crystal ball to know what makes mergers succeed. But what we do know is how to make brands that stand the test of time. 

We see three characteristics of strong brands that are relevant for mergers and demergers:


However brilliant the business strategy behind a merger, there is always an opportunity to tell a compelling story about the future beyond the promise of synergies and hockey-stick growth. Not a marriage but the birth of something new and important. This is what we mean by a transformative brand.

The Diageo brand proposed an emotional logic for the merger: the promise of everyday pleasures, enabling investors, staff and customers around the world to make sense of the new firm’s capability and reach. 


Bringing employees on the journey to define an authentic and inspiring brand is critical, and especially important in the context of a merger where two organisations are coming together to create something new.

From an employee perspective, change can be hard and many of the traditional methods of  engaging staff such as change programmes or internal comms are ineffective and produce low engagement. We believe in a more human way to change: change through learning. 

Clients such as Daimler, Allianz Global Investors and Telia have focussed on creating effective digital peer-to-peer learning to help everyone to discover, experiment and share ideas with each other, build pride in the new brand and embed new behaviours into the business. On average over 70% of employees would recommend these programmes to fellow colleagues, demonstrating the engagement they create.


Diageo shows that a good brand can amplify the success of a well executed business strategy. Kraft Heinz shows that even the achievement of promised merger synergies is not enough to make a merger successful if the company misjudges consumer trends.  

So the third characteristic we see in brands that stand the test of time is that they combine responsiveness to changes in the marketplace and responsibility to the wider community beyond their customer base.  We call this a conscious brand.

The main question that arises from these observations on M&A is simple: if you are planning a merger, why should yours be in the 10-30% that succeed rather than the 70-90% that get unravelled in the three to five years post completion?