The regular onslaught of headlines is testament that the multibillion-dollar mega-merger is back with a vengeance. What may be lost in the hype, however, is that outsized deals breed outsized expectations, not only for cost savings but also for revenue growth.

Consider: Procter & Gamble expects to add 1% in top-line growth through revenue synergies resulting from its acquisition of Gillette. More than half of the €165 million in anticipated synergies created by the Lufthansa-Swiss Air transaction are revenue related. And even when they don't communicate specific revenue synergy numbers to Wall Street, the logic of many recent mega-deals, including Bank of America and MBNA and Pernod Ricard and Allied Domecq, rely on the combined company's ability to grow by targeting new customers and markets.

Yet, as a rule, pre-merger expectations don't measure up to long-term results. One study suggests that 70% of merged companies don't achieve their predicted revenue synergies. These problems are further complicated when companies have multiple brands and serve a variety of customer segments.

Most companies struggle to manage multiple brands even without the complications and pressures of an M&A deal. Often, companies inadvertently sacrifice the distinctiveness of the customer experience in their zeal to cut costs and integrate operations. Republic Industries, for example, famously combined the car rental counters, shuttles and other customer-facing operations of Alamo and National following their acquisitions, which confused customers, led to a dramatic rise in dissatisfaction with both brands and ultimately pushed Republic into bankruptcy.

If the newly combined company hopes to meet expected growth objectives, the executive team must create a combined offer that is uniquely valued by customers and differentiated from competitors. If the merger won't help the "new" business grab new customers, build a bigger share of wallet or create greater lifetime value, then perhaps the deal shouldn't be done.

Senior marketers can help ensure the transaction lives up to its promise by following these three principles:

  1. Think customers first. A successful M&A program must start with clear customer targets for each brand and for the overall portfolio. The target groups must be large enough to warrant the time and attention required for effective brand building and differentiated enough to minimize cannibalization. A merger poses a unique opportunity to think about customers in a broader and more integrated fashion. Combining customer databases and conducting new market research during the merger integration process, for example, will enhance understanding of what drives purchases and competitive positioning. The more comprehensive this understanding, the better senior executives can make decisions on structuring and managing the merged brand portfolio.

  2. Manage your brands before they manage you. By setting clear roles for each brand in the portfolio, companies can drive business growth while generating marketing efficiencies. Portfolio decisions often require making tough calls based on detailed analyses of customer targets, brand performance and opportunities, and each brand's long-term impact on business results. Many options are available for optimizing the combined portfolio. For example, brands can be leveraged through repositioning or the creation of new offers or concepts. Or, to better support the strongest brands, weaker brands can be divested or the underlying products and services re-branded. Synergies across the portfolio can also be gained through loyalty programs and cross-product promotions.

  3. Organize for success. An acquisition provides a unique opportunity to improve the way a business manages multiple brands. The CMO must join forces with the CEO and other senior executives to create and support the organizational structures, processes and metrics necessary to foster long-term brand building. Brand managers must evangelize the role of the brand while also translating brand ideas in a practical and compelling way. The brand proponents must have the necessary authority, resources and organizational support to succeed. Finally, a measurement program is critical to demonstrate how brand management is driving tangible business impact.

For all the hype around large M&A deals, history has shown that their performance often falls far short of expectations. Businesses must always work to identify cost savings through integrating operations, people and systems, but the long-term growth of the post-merger business is the ultimate arbiter of a deal's success. Achieving that growth requires companies to better understand and utilize the power of their combined brand portfolios to influence customer purchase decisions.

Sign up for free to read the full article. Enter your email address to keep reading ...


Ken Fenyo is an associate partner at Prophet (, a consultancy specializing in the integration of brand, business, and marketing strategies. He can be reached at