Branding a key factor for M&A deals

Branding a key
factor for merge &
acquisitions deals

Branding a key factor for merge & acquisitions deals
he Great Merger Movement" spanned a decade of
major consolidations in the United States, from 1895
through 1905. A notion of its scale may be gained from
the fact that companies acquired in mergers in 1900
were worth around 20% of GDP. More than a century
later, unsurprisingly, Brazil is undergoing its own
process of major consolidation. Whether this is just the
beginning of it, or the middle, or the end, is not known.
However, one thing is certain, from the perspective of the
brands involved nothing will remain unchanged and as
consumers we will have to get used to letting go. Several
Varigs will vanish, many Telco’s will be transformed,
and various new BRFS and AMBEVs will emerge. Some
of these processes will be developed more strategically
rather than being rushed through, others less so.
Over the last 5 years, branding consultants have been
asked to take part in major consolidation processes.
In most cases, we are called in after agreements
have been signed and announced to the market
because branding is rarely deployed as a key tool at
the negotiating table from the outset, despite its
being seen as a strategic asset for the business.
While companies do understand that their brands
are more than just names or logos, many are not
sure how their brands can actually become live
business assets capable of generating identification,
differentiation and value. In this respect, matters
such as portfolio strategy, creating unique culture,
and defining corporate citizenship platforms for
merged companies have become branding issues.
In the heated atmosphere of an ongoing merger, a
branding project always sets out to convey the best
message to key stakeholders. There may be many
variables given a record of equities built up by two or
more brands, but if there is no one single solution,
then defining criteria for decision making will become
increasingly complex. On top of this is the fact that the
business strategy has not always been consolidated.
The important point is to decide what to retain, what to
join, what to drop, and what has to be created starting
from scratch. Assuming that an understanding of
synergies and complementarities will at the very least
mean examining the name, symbol, visual identity,
culture and communication of those involved, it is
easy to see that a project like this requires dedicated
resources and plenty of highly flexible resourcefulness.
Finding a clear definition that points to one single way
forward is important - not least because the idea is to
avoid losing value while definitions are being discussed.
The impression is that competitors will always change
up to play a faster and more assertive game when a big
deal goes through. They will seize the "opportunity" to
reposition or invest more. Plain action and reaction.
Soothing nerves and controlling the process of
engagement to get decisions communicated internally
first is always a challenge. Obviously no employee likes
to see the news first in a newspaper reporting that the
brand they have worked for over many years will be
gone, or become something that has no meaning for
Branding a key factor for
merge & acquisitions deals
"

4
them. However, many companies
will not even start thinking about
it until after the effects of an
announcement have been felt.
Measuring the economic impact of
the alternatives under discussion
is quite a complex task too,
especially for brands operating
on a global scale. It can cost over
a million dollars just to register
a brand name with regulators
in several countries for different
product classes. So carrying out
a transition plan to change one
or more brands at numerous
points of contact is a significant
investment, especially for consumer-
facing industries with gondolas,
packaging, fleets of vehicles and
communication. Moreover, we
do not believe that quantitative
survey statistics alone can measure
a consumer’s willingness to let go
of a brand, or move on to another.
Unlike other countries, the situation
in Brazil was that companies
were allowed to announce merge
& acquisitions proposals before
obtaining full authorization from
the antitrust agency (local acronym
CADE). The waiting process took
up to 2 years and it was hard to
know what could or should be built
in the meantime. In this context,
many corporate names became
brand names. Recently, new
antitrust legislation in the form
of Law No. 12,529 took the place
of the previous Law No. 8,884.
Major alterations include a system
for prior notification of merge &
acquistions deals and approval
from CADE. This poses a great
opportunity for the "new" brands
to start communicating with their
employees, customers and investors
right from the start. The question
is to what extent this process will
be followed by companies and how
the inputs or resources needed will
be allocated at a stage when the
parties involved are still "looking
at each other" and not necessarily
feeling part of the same team.
In the hot-house process of
searching for an identity, strategy
falls by the wayside. Ironically, a
narrow or blinkered view of a brand
- as just a name plus logo - often
emerges from hastily organized
due diligence meetings held to
comply with initial obligations.
Going the right way about creating
a name has to be one of the most
complex of processes because it
involves a collective exercise that
is often abstract. When it comes
down to "Like it" or "Don't like it",
logic tends to lose out to emotion.
In short, the branding issue, which
often seems simple in the eyes of
actors holding complex negotiations
between the parties involved, may
become even more complex if
ignored. But despite all the issues
involved, if we could give just one
piece of advice to those working on
a project for a brand undergoing
consolidation, we would say that the
most important thing is to avoid the
perception that there are winners
and losers. This alone can minimally
add to the chances of a successful
brand coming out of a merger.
Paulista avenue
When it comes down
to "Like it" or "Don't
like it",logic tends to
lose out to emotion.
Some points to watch
for on the road to
consolidation:
When business strategy
has yet to be defined
In a rush, a corporate name
becomes a brand name
When the role of stock ownership
is ignored in brand building
Capital market a key
target for branding
Internal resistance
must be crushed
When a brand is bought
from a founder
Brazilian brands go
shopping abroad
When it’s time to
deconsolidate,
reorganize brands
When verbal and visual
identities build a bridge between
rational and emotional
Corporate citizenship is
part of the package too

6
e are longstanding advocates
of brand strategy as a direct
reflection of business strategy.
However, there are some situations
in which brand strategy has to be
built even before business strategy
is consolidated, or even defined.
Due to legal restrictions on the
use of a brand, or the need to
announce a merger and acquisition
to the market, executives often find
themselves facing the challenge
of taking quick decisions on
their brand without being sure
of a solid basis for the business,
which may seem like taking a
huge leap without a safety net.
The new anti-trust legislation,
with CADE introducing tougher
requirement for its analyses, led to
a tsunami of merge & acquisition
deals in the last fortnight of May this
year, prompting many companies
to speed up negotiations. Hence
the brand strategy questions that
came up for these companies after
they made an announcement to
the market: what will Diageo do
with the Ypióca brand? Will there
be a change in its positioning? Or its
visual identity? What will come out
of the Azul - Trip deal? A new brand?
Will they retain their current brands?
Obviously, questions like these are
just part of a whole complex that
has to be assessed. Nevertheless,
brand strategy is perhaps the most
visible aspect for customers buying
these brands, the one that has most
effect on employee engagement,
and the one that signals change
more tangibly for other parties,
such as the capital market.
When business strategy
has yet to be defined
1
At this point, a crucial move is
to build the new strategy on the
basis of the most deeply rooted
and differentiating values of
each company in the case of
a merger, or to show respect
for the culture of the acquired
company and get leverage from
it, in the case of an acquisition. In
such a messy and risky scenario,
the best alternative is often to
define what you NOT want for
the brand, and on that basis
see what territories the brand
can take over in order to ensure
differentiation in the marketplace.
Supposing this solution may be
temporary and that brand strategy
will deepen as the business
consolidates, a very important
point is not letting competitors
in on future moves, or spending
a lot of time and resources on
transition scenarios. The idea is
to get out a rapid response for
the brand in the marketplace,
while retaining the ability to
adjust its course in the future.
Although there are several points
to watch, experience shows that
there are a lot of positive factors for
building brand strategy in a scenario
of business strategy being defined.
Often, when strategy has yet to get
past the stage of putting together
PowerPoint presentations with
a firm of business consultants, a
question as simple as 'Which brand
do we put on our business card?"
becomes a major point for discussion
- and in many cases, for sure, will lead
to business strategy being revised.
In addition,building brand strategy
has a fundamental impact on senior
management's engagement with
goals and targets and may also be
an important way of firing up staff
to work for goals and targets.
In such a messy and
risky scenario,the best
alternative is often to
define what you NOT
want for the brand.

8
hen branding and business
strategies are being developed at the
same time, one of the most common
mistakes we have seen is the name of
the new corporate entity becoming
a new corporate brand too. Often
racing the clock to meet legal
requirements, the corporate name
eventually takes on a role that goes
beyond contractual wording and
almost empirically starts to take on
the responsibility for communicating
with internal and external audiences.
This is a high-risk situation, since
the corporate name invariably has
no real content, nor does it contain
a definite or differentiated message.
From the internal point of view,
it can generate noise in a period
already fraught with uncertainty,
layoffs and structural adjustments.
From the external point of view,
raising the status of a corporate name
to that of a corporate brand can get
in the way of the process of building
brand strategy.You often hear people
explaining the problem like this:" it was
not really the brand we preferred,it
came out of a meeting [or we already
had the name registered] but since
so much work had been done and
so much money had been invested,
this is what we are left with",which
shows that the problem was dealt
with but nobody thought it through
properly. Not to mention the obvious
waste of resources on building
something that is not going to last.
In a rush,a corporate
name becomes
a brand name
From the external point
of view,raising the status
of a corporate name
to that of a corporate
brand can get in the
way of the process of
building brand strategy.
The brand equation
2
Brahma and Antarctica, Sadia and Perdigão, Itaú and Unibanco, Santander and Banco Real, Fibria and VCP Aracruz,
Nestlé and Garoto, TAM and LAN, Brasil Telecom and Oi, Casas Bahia and Grupo Pão de Açúcar

10
eyes of industry analysts is now
tracked by a much larger group
of stakeholders. This directly
affects brand perception among
customers and consumers who are
increasingly looking at companies'
origins and developments in
relation to corporate citizenship.
The question is often asked during
a consolidation process: to what
extent is it good or bad to have
the corporate brand endorsed
by its shareholders' brands? Until
recently, the corporate brand was
the "mother brand" that endorsed
and contributed value to the other
portfolio brands.On that basis,
portfolio architecture and strategy
was built.Today,when this brand has
one or more shareholders,it is crucial
to see whether these endorsements
will benefit the portfolio or not.Add to
that the task of analyzing these brands'
profiles, cultures,and especially
images and reputations.You can no
longer build a corporate brand and
see how it relates to other brands in
your portfolio without looking at the
latter's relationship with controlling or
co.parent brands.The guiding thread
used to help a business build its own
culture must at the same time be
increasingly consistent and flexible
if its brands' proposals are to hold up.
rom the internal point of view,
defining instances for approval
by shareholder or companies
holding a stake in the business
is an important factor affecting
the way a brand project moves
forward. These stakeholders must be
involved right from the outset of the
project in order to ensure positive
results and the backing needed
for the CEO, who may not always
be able to rely on the support of a
functioning executive committee.
Major conglomerates increasingly
own numerous companies that
may be business partners or may
be competing among themselves.
In this scenario, a brand's stock
ownership structure and its
relationship with the controlling
portfolio are increasingly matters
for concern and analysis for
brand managers. A relationship
that was previously restricted to
shareholders and the watchful
When the role of stock
ownership is ignored
in brand building
Today,when this
brand has one or more
shareholders,it is
crucial to see whether
these endorsements
will benefit the
portfolio or not.
3

mong the key stakeholders
around brand building is the capital
market, both analysts and the
investing public in the form of big,
medium and small shareholders
[the latter having even more impact,
since their behavior is individual,
like these brands' consumers].
In this respect, brand strategy
becomes a means of communicating
and tangibilizing changes, and
for showing real evidence that
the company is implementing
its business strategy. As a result
of this, branding projects are
increasingly involving major
investment banks and shareholders.
Many of the business strategy
adjustments that instigate
consolidations come from pressure
to boost market value. Given that
brand value is a significant part of
a company's net worth, working
with this percentage value to
boost the absolute number is
essential for a company to get
better market valuations.
Averaging the world's most valuable
brands on Interbrand's ranking,
brand value may reach 40% of a
company's net worth. But this is not
the case for B2B markets, in which
tangible assets predominate in the
total value of a business. On the one
hand, this is a challenge for brand
managers struggling to boost their
significance for the company, on the
other it poses an opportunity for a
company to build a single promise
with much less investment.
Strong brands with a consistent
record of delivering what they
promise will get better results
- due to their consumer loyalty
or preference, or higher levels of
employee engagement boosting
their productivity. Nevertheless,
many companies are unable to tell
the difference between adjusting
brand strategy and retouching visual
identity or changing a name. If these
cosmetic adjustments do not come
together with real change in the
company and its delivery, they may
yet have positive impact in the very
short term. However, in the long run,
the market will inevitably penalize
these companies with projections
lower than before their brand change.
Therefore, brands concerned to
consistently meet capital market
expectations tend to post even
more positive results and earn more
preference in investors' minds,
which is extremely relevant at a
time when a culture of investing
in capital markets is taking shape
in Brazil and foreign investors are
looking at opportunities here.
4
Brand value
may reach 40%
of a company's
net worth.
Capital market a key
target for branding

14
uite often, when a business
has grown and is ready to go through
a process of consolidation, someone
says it is "looking for a bride to marry."
Everyone gets ready for a party on
the big day when CADE authorizes
the deal - and for the honeymoon
when the numbers for the joint effort
are announced. However, these
deals are also like weddings in the
sense that the story starts with a
long list of challenges to be tackled.
One of the biggest problems is that
strategies are normally devised
and agreed to on the basis of cost
savings or synergies in the market,
thus leaving out people and cultural
issues. Normally, when party day has
been marked on the calendar, it is
because the two sides have reached
a consensus and know what they
want for the future. The important
point here is that the fact of reaching
this convergence in a business-
like fashion does not necessarily
mean they will be soul mates.
Just like weddings, mergers require
planning and agreement between
parties. Can you imagine getting
married to someone you do not
know well? Who does not share
the same values? Or whose aims
in life are quite unlike your own?
Of all the assets in play during a
merger or acquisition, the one that
should be watched most closely
is brand culture. The challenge of
capturing this intangible value
during the process - and boosting
it - is extremely underestimated
and poorly understood.
Over the last few decades, we have
seen several marriages that were
unexpected given the history of the
brands involved and their cultures.
The latest case of this type was the
Sadia - Perdigao deal. Both market
leaders, direct competitors investing
heavily in frontline retailing, both
with the main objective of beating
each other's sales numbers. To
achieve their goals, each created
their own culture in the race for
customer preference. One more
aggressive more focused on numbers
and results; the other lighter on that
side but more concerned to build
closer relations with customers by
building personal links. There was no
right or wrong: the important point
was that staff felt proud of being on
their team, and they saw the rival
company as their chief adversary.
BRF - the company resulting from
this deal - started off on the right
road.Luiz Fernando Furlan,one of
the leaders involved,showed that
strategy for unifying cultures was
on the agenda during the planning
period when he said "We are
preparing to be missionaries in order
to truly unify the two companies
" [Gazeta Mercantil,2009].
When cultures are being integrated,
brand strategy can be of great
assistance. Since the first steps
taken by "consolidators" involve
legal, financial and administrative
issues, the chances are you will find
that people are badly informed and
dissatisfied, not knowing exactly
where to go and how to act.
The first major challenge, which is
not at all easy, but which helps a
lot during a transition is to assure
people that the deal is being handled
well and carefully. That there are
people keeping a close watch on
each legacy asset, and that changes
will be made at the right time and in
the best way for everyone concerned.
By officially notifying decisions to the
internal public, management gets a
strategic opportunity to minimize
noise and establish a relationship
of trust and transparency while
allaying concerns over decisions
that have yet to be made.
Internal resistance
must be crushed
5
Strong brands,which
stay consistent with
their promises and
deliverances,achieve
better results.
The new brand's promise does not
have to be the exact sum of each of
the parts.Understanding synergies
and complementarities between two
businesses and their brands helps to
foster awareness,lower anxiety levels
for the internal public,and stimulate
a new landscape for innovation.
This new scenario may be bigger
by combining the best from both
companies into something new that
inspires and motivates their teams,
who now have their first shared goal.
Branding is neutral territory for
settling disagreements and the
analyses involved are not as cut-
and-dried as business strategy.
Ultimately,a company consists of
its people.It is their reaction that
will determine the success of the
operation.And is branding that will
get them passionate about a new idea,
and work hard for the new team.
The path of discovery

16
When a brand is bought
from a founder
The good news is that in cases of
natural alignment with philosophies
converging, the corporate citizenship
platform in the consolidated scenario
will show gains in terms of robustness
and visibility. In the case of the Itaú-
Unibanco merger, for example, there
was a chain of movie theaters - an
emblematic initiative that had been
taken by Unibanco. This issue was
the picked up on brand management
radar and the name of the movie
theaters changed from Espaço
Unibanco de Cinema to Espaço
Itaú de Cinema. At the same time,
the experience of these venues was
aligned with Itaú's brand identity
without the losing the DNA or identity
of an extremely significant cultural
platform - and one totally in line with
the bank's whole style and approach.
Interbrand's work in recent years
has included an integrated approach
to these assets. Our attempt to
involve brand managers and those
responsible for corporate citizen
initiatives and their platforms
bore fruit immediately in the
form of the level of engagement
of staff in the new companies
and faster development of
post-merger strategies.
ince branding is a relatively
new discipline to be seated at the
negotiating table for mergers and
acquisitions, corporate citizenship
platforms and sponsorship from
companies that do much to help
build them, are seldom seen as key
assets for the process. Nobody will
forget how hard Banco Real worked
to build its sustainability platform.
But can anyone tell us how much
of this effort was inherited by the
Santander brand after the merger?
Initiatives taken by brands, their
foundations or associations, will
often end up being left out of a
package or being reduced to merely
secondary considerations. This
may happen for reasons ranging
from legal agreements and stock
ownership issues at the time
of consolidation to challenges
concerning the legitimacy of these
initiatives and corporate citizenship
platforms in the new context
of the two corporate cultures
being joined. During a phase of
philosophical misalignment, so
to speak, this agenda may be
backgrounded by major business
decisions or other expressions seen
as more critical for the brand.
Corporate citizenship is
part of the package too
6
n the process of devising
strategy and building identity for
consolidation, showing respect
for the origins and legacy of each
brand involved is a matter of
survival. Stories and values are often
embodied or personified in the figure
of a great founder or manager. So
the question is how to maintain
and respect equities that have been
built in the past when the new
context is a fundamental change
in the dynamics of the business?
Owner-managed companies
will often become professionally
managed companies. In these
cases, even if the "owner" stays on
as an executive, the dynamics of
the business, the ways of applying
pressure to meet targets and
management style will go through
a process of being "impersonalized",
which may be very good or very
bad for the people charged with
building a new brand. Employees
are often unable to differentiate
the brand they work for from the
brand of the entrepreneur who
founded the company. Worse yet,
the entrepreneur himself, normally
responsible for the "sale" of a
certain operation, often remains
attached to his own way of doing
things, making it hard to introduce
new rules and engage his former
employees with them. In these cases,
the entrepreneur must be involved
in creating the new brand strategy
and acting as an advocate of the new
dynamics, the new business, and the
new brand, showing employees that
the origin of it all will be respected,
but changes are needed to build
something bigger - a new paradigm.
In many cases, these dynamics for
building brand strategy in a merger
/ acquisition involve the families of
shareholders and / or the founders
of the original companies. Even if
these bodies have vote or veto, they
will invariably get involved in brand
strategy issues as spokespersons or
supporters of something that goes
beyond the business itself. A legacy is
often passed down for generations,
and it now has to be seen in the light
of the new dynamic. It would be useful
to have an almost archaeological
study of the dynamics and institutions
that helped build the brands involved,
so that the new brand will not be
"insensitive" by making its appearance
in the market before taking stock
of these inputs for the process.
7

18
or companies aiming to grow
through mergers and acquisitions,
shopping around in Brazil has
gotten too expensive, and it is no
longer so easy. So top Brazilian
brands started looking to foreign
markets, which posed new
challenges and very different
scenarios in relation to situations
they are accustomed to locally.
Brazilian brands buying up
operations in other countries have
to tackle two major challenges.
One is to internationalize and
translate their way of doing things
for operations and behaviors
in different places, not only for
business matters as such, but also by
immersing themselves in different
cultures, histories, legislation,
behaviors and needs. The other
challenge is to learn how to be a
parent company, a leader that comes
in with a well thought-out brand
management proposal and a long-
term approach to the local scenario.
Historically, Brazil has been a land of
opportunity for international majors
and brands eager for new business
and bigger profits. We have been
formatted to adapt to the 'status'
of being a colony for many decades,
working for objectives decided
elsewhere, and tropicalizing brand
strategies without asking too many
awkward questions or raising our
voice. Over time, we have learned
from people in the know and at the
same we have been building up our
own DNA. Now, we have to take
what we have learned and put it into
practice by dealing the pack and
making the rules for own game.
Brazilian managers going to
other countries to take over a
company and its brand are taking
on a big role. A constructive way of
Budweiser
Brazilian brands go
shopping abroad
8
Historically,Brazil
has been a land
of opportunity for
international majors
and brands eager
for new business
and bigger profits.
positioning for a newcomer in this
context is to be transparent and
objective from the outset by telling
people what is going to happen
during the transition. To make a
successful entrance, it helps to
show perspective and signal a long-
term commitment, thus diluting
employees’ fear of seeing their brand
disappear as soon as the new leader
has made himself at home there.
Brazilians doing merge & acquisitions
deals in other countries have in
many cases started by retaining local
brands,apart from parent brand
aspects and the operation itself.It
seems that changes are not made
due to fear and insecurity,since we
are new on the international scene.
But we have seen the opposite too,
with brands being chopped in a rush,
without thinking it through,in order
to channel efforts into business and
management issues.Whatever the
course decided,any scenario for
coexistence between brands requires
active management from day one - if
only to mitigate risks and control
critical situations in the medium term.
The recent example of ABInBev buying
Budweiser in the United States is
emblematic of a situation that has
stood out for causing unease and
antipathy toward the lead company.
A tactless approach to the legacy
of the Anheuser-Busch brand -
an American cultural icon - led
to a liability that will be hard to
settle. On arriving in America,
ABInBev imposed its own style of
management culture on executives
and particularly a local community
whose lives have been linked to the
company for decades. In a country
like the United States, where people
mobilize around issues that trigger
strong nationalist sentiment, the
market's quick-fire response may
well be echoed in financial numbers.
The lesson to be learned from
stories like this is that the new
leader in a business may well meet
with rejection and distrust. Merely
exporting our set of tools, processes
and ideas that shaped a successful
brand in Brazil will not ensure that
synergies are tapped in the new
market. This applies across the
board, from brand strategy and
management to internal culture,
communication, business practices
and employee engagement.

20
with new courses such as journalism
and advertising to extend its scope
beyond business management,
whereas the nonprofit Ibmec São
Paulo preferred a focus on business
and economics. Under independent
managements and different groups,
the two operations little in common
beyond the name and logo - which
no longer characterized the same
brand.The process of separating
brands and defining a new one
[Insper] for the institution in São
Paulo took a year and migration
is still underway, while the Ibmec
brand [now identifying only the
original Rio de Janeiro operation]
has not entered São Paulo.The
involvement of students and faculty
Insper throughout the period
of building this new brand was
not always fluid, but it proved an
important point: a great brand can
and should always go back to its
DNA, its defining features. Reviving
and revising its real vocation to then
embark on a more coherent process
of reorganization, strengthening
its ways of communicating and
being perceived in the proposed
new brand scenario. In this case, the
pointer to its origin was preserved,
and transition took place naturally.
he urge to grow, gain
market share and boost revenue
may be taken as "the" reason for
consolidating, but business units
and their brands may be wound up
or hived off too, and for the very
same reasons. Roughly speaking, this
fragmentation scenario arises from
business strategy adjustments - the
end of a joint venture, for example, or
a decision to specialize, or an offering
now seen as differentiated and having
developed into a major generator of
value and financial results, or simply
the absence of chemistry between
very different kinds of operations,
cultures and proposals.Technically
this is part of the job of organizing
and managing a brand portfolio.
A split means that two players
go back to running their own
operations, so several questions
are posed: who gets the brand for
the integrated operations? How
can employee motivation and
commitment be maintained?
How can the advantages of
splitting be communicated
while preserving the past of this
business and its brand equities?
An interesting case in this respect
is a Brazilian business school called
Insper.Around three years ago, two
operations lined up under the Ibmec
brand started to travel separate roads
- including in the geographical sense
too.The Rio de Janeiro based Ibmec
for-profit operation was growing
its education portfolio horizontally
When it’s time to deconsolidate,
reorganize brands
9 10
he classic issue of which logo
remains after a consolidation starts
to cause tension to the extent that a
date for the official announcement
of the deal comes nearer and not
infrequently the market finds
meaningless acronyms and symbols.
There are a few options, such as
maintaining one of the identities,
combining both, or creating a totally
new one. However, this decision
often boils down to purely emotional
issues. The fact of not knowing
which "little brand" will be on a
new business card triggers a real
identity crisis in most companies.
And it is just the beginning of
a much deeper problem.
Obviously a name or a logo in
itself will not be able to transform
a new company, but in fact they
When verbal and visual
identities build a bridge
between rational
and emotional
are tangible symbols of the time
of joining forces. They take on the
role of the greatest representatives
of new ideas too. Few companies
realize that at this time there is a
valuable opportunity to evolve, to
reconnect with their employees and
society – by wearing new clothes.
To take one example, does anybody
remember that Banco Itaú was
not originally called Itaú? Or that it
has not always been represented by
its "blue biscuit"? The bank started
life as Banco Central de Crédito
and became Banco Federal de
Crédito in 1943. It was not until
the 1960s, several mergers later,
that it took the name of Itaú.
Insper

22
n beginning an identity
project for a merger or acquisition,
as is the case for brand strategy
projects, we must first of all see what
the identities involved have in terms
of positive equities and weaknesses.
As in any process of change, we stack
up the good things on one side, and
the rest, which is no longer useful
is discarded or sent for recycling.
The stack of positive equities is
the one that points toward the
future. New opportunities will arise
from it to define the identity being
built - but the creative process is
guided by brand strategy. There
is no way of assessing whether
a name or logo is right without
having a clear notion of what the
company wants to build with its
brand. To see how a company is
going to dress or talk, we must first
learn about its personality, who it
wants to be, what its characteristics
and differentials or edges are.
Since a brand is the outcome of a
chain of experiences, the role of
design is to create a guiding thread
across these experiences. It does not
matter whether we are talking about
a color palette, stationery, packaging
or a physical space: it is through the
design present in every experience
that we interact with brands.
In the process of creating new
identity for Alpargatas, for example,
the logo was the cherry on the cake
of attitudinal change that has been
taking place in recent years. During
this period, Alpargatas built a
unique multicultural, multi-brand,
multi-national identity that put
an end to a longstanding process
of separate operations in Brazil
and Argentina. Where before there
were companies with completely
different logos and identities,
today there is a single brand.
When there is a consolidation, it
does not always need a new logo
or new name. The Itaú - Unibanco
merger involved enormous
challenges. All the scenarios were
exhaustively examined in order to
decide on a symbol for the sum of
these two great financial fortresses.
The answer as to how to incorporate
elements from both banks' identities
in one single system did not come
as a new logo or a new name, but
a new palette of colors, symbols,
icons, product names, and other
elements, anchored on the use of
orange as the guiding thread.
When there is a merger or
acquisition, the resulting company
is repositioned on another level. In
this context, qualitatively investing
to build its identity is crucial to
generate the right public perceptions
of what this brand wants to
communicate. It is vital to bear in
mind that the main role of design is
to transform perceptions into reality.
Today, strong and admired
brands pose various lessons
in this respect by creating and
sustaining business cultures
increasingly guided by design.
In their universes, each point
of contact becomes a unique
experience, capable of earning
the loyalty of the target audience
and continually reaching
better financial results.
This is how Coca Cola delivers
happiness. This is how the Brazilian
market recognized the value of
Korean cars, thus undermining
past prejudices and gaining
value for their brand equities.
evising a perfect name is not
easy: it must be able to represent
what the new company stands
for. It must be inspiring, easy to
communicate, and capable of being
registered intellectual property for
classifications and in countries of
interest for the company. To get
some idea of what this means, by
the turn of the millennium, some
2 million brands a year were being
registered in the European Union.
In a consolidation process, a new
name is needed when previous
identities are no longer able to
represent the new offer, or the
new period, for legal or strategic
reasons. The name will be the first
trace of an emerging identity; it
will set the tone, steer a course,
and lead to (or fail to lead to) an
initial favorable impression.
In the case of the Votorantim
- Aracruz merger [both pulp
and paper makers], we decided
to create a new global name.
Here were two relatively young
companies compared to the other
players, facing the challenge
of joining the forces of their
employees and building the world's
largest hardwood pulp maker.
The grit and focus in the DNA
of the merged company, which
has now taken over as industry
leader, combined with the "pulp
fiber" product's origin, were the
inspiration for the name Fibria,
which now represents and
sustains global leadership in its
business for a firm of genuinely
Brazilian origin and capital.
So what about
the name?
Putting the
house in order
A new name is needed
when previous
identities are no longer
able to represent
the new offer,or
the new period.

24
he new antitrust law (Law
No.12529/2011), which has been
in effect since May 29, significantly
alters the procedure for submitting
applications to the anti-trust agency
(Administrative Council for Economic
Defense, or CADE).These alterations
affect the merge & acquisitions market
in Brazil and companies are advised
to take certain precautions that were
previously secondary or dispensable.
Under the new law, CADE must now
be notified if a deal involves "economic
concentration" and certain levels of
revenue.An "act of concentration"
occurs if a transaction involves
acquisition of equity interests, setting
up a joint venture, or the acquisition
of assets (including brands), among
other conditions.Transactions must
be submitted to CADE whenever they
involve an economic conglomerate
that has posted gross annual revenues
of R$ 750 million or more with at least
one other conglomerate that has
posted gross revenue of R$ 75 million
in Brazil in the year prior to the deal.
The new law has adopted a system
of prior analysis of mergers ("acts
of concentration") and parties may
The new antitrust law and precautions
for merge & acquisitons deals
not close a deal before getting
CADE authorization.There are two
consequences arising from the
above.The most obvious one is
that getting the antitrust agency's
approval - which may take anything
from 3 weeks to 330 days - will now
be a preceding condition before a
transaction is concluded.The other
effect, which poses greater practical
difficulties,is the obligation to avoid
so-called gun jumping by preserving
the independence of the companies
involved until CADE's decision,since
the law prohibits transfer of assets,
or exercise of any kind of influence
by one party over the other,or
exchanging sensitive information
beyond a reasonable limit.
Companies that fail to comply with
these obligations will be subject
to severe penalties,including fines
ranging from R$ 60,000 to R$ 60
million, the transaction being declared
annulled, and an investigation
into anticompetitive conduct.
In this context,there are certain
precaution that should be taken
by companies involved in merge
& acquisitions transactions,
By lawyers Machado Meyer Sendacz Opice
especially those with competitors
or parties potentially integrated
as suppliers or distributors.
Firstly,companies are advised to make
a preliminary assessment of the anti-
trust risk involved in a transaction.
This measure is an important factor
steering negotiations on contractual
terms and even for defining acquisition
price.For a seller,accepting a lower bid
in a deal that will tend to get approval
from CADE quickly and unconditionally
may be more advantageous than
holding out for a higher price from
another deal that might involve
problems with the agency.
In addition,parties should negotiate
specific clauses to protect their
interests.In this respect,a seller may
stipulate a deadline ("drop-dead" or“long
stop” date) for CADE approval,after
which the contract may be canceled
without onus or fees.They should agree
on protective mechanisms in the event
of CADE rejecting the transaction,
including payment of compensation
by the buyer,or compelling a party
to adopt any measure capable of
addressing competition concerns
identified in order to obtain CADE
approval,such as selling off stakes
in other companies or assets (hell or
high water clauses).On the other
hand,a buyer may demand control
over the process in relation to CADE,
to delimit acceptable restrictions
and stipulate the possibility of
pulling out of the deal or lowering its
price if an unacceptable restriction
is being posed - such as selling off
a particular brand of the acquired
company to a third party.
In order to avoid gun jumping
risk,the parties should set rules
for the flow of information between
them through to closeout date;
stipulate confidentiality obligations;
and regulate their behavior in relation
to customers,suppliers and other
partners during the transition period.
Finally,an important point to note is that
the need to preserve the independence
of the parties does not prevent a buyer
from negotiating guarantees in its
favor,such as the seller's obligation
to maintain the normal course of
business,preserve assets,business
relationships,and key employees,and
refrain from taking on debt above a
certain level, among other items.
Negotiating contractual clauses of
this nature is already part of merge
& acquisitions practices in countries
that adopted prior antitrust approval
procedures in the past, and this type
of negotiation is essential to avoid
surprises that may adversely affect
the outcome of the transaction.The
adequacy and efficacy of these clauses
will largely depend on the experience
of the parties' attorneys in corporate
and antitrust areas of practice.
The merging process
Before the antitrust law
Merger
Merger
Announcement
Announcement
CADE
CADE
Now
MARCA
BRAND

26
Institutional support by
Contact us
Interbrand do Brasil
Phone +55 11 3707 8500
interbrand.sp@interbrand.com
For further information on brands
www.interbrandsp.com.br
www.interbrand.com
www.brandchannel.com
Interbrand started its activities in 1974, when the world still thought of a
brand as only a synonym to logo and name. There are currently 36 offices
worldwide and a highly qualified team of professionals, who make our
business rigorously detailed and creative.
We create and manage brand value, putting it in the middle of the strategic
targets of the business. We combine pioneering and practice in the branding
discipline with creativity and ability to innovate, in all the life cycles of a brand.
Brand Strategy
The brand strategy work requires
intense partnership. Our team works
along with the clients to identify
market opportunities and help them
to position their brands, thinking
of short and long term strategies.
To do so, we carry out data analysis
that involves quantitative aspects
as well as the identification and
mapping of functional, inspirational
and aspirational benefits of a brand.
The brand strategy involves several
subjects and expertise, from brands’
architecture and position to the
engagement of collaborators.
Actuation areas
Brand Identity
A well-defined brand identity is a
powerful communication tool, which
goes beyond the identification of
a business or organization. It is an
endorsement of quality, value and
trust. It promotes understanding
and distinguishes companies from
products for the consumers.
We understand brand identity
as the reflection of its strategy
in aspects that are visible in the
everyday routine, such as the
name, the tone of voice used
in communication, logo, stationery,
packaging and the other points of
contact where the brand is present.
Brands’ Assessment
The assessment aims to understand
the financial value of a brand and
how to increase the role it plays to
generate measurable impacts.
It is through an assessment work that
companies can have a more specific
dimension of how much brands can
positively impact on their results,
generating value to the business.
Interbrand is the pioneer in
this subject, which it has been
developing since 1988.We
annually prepare the Best Global
Brands ranking, published by
the Business Week magazine as well
as specific rankings by country.
Text
Daniella Bianchi,
André Matias, Victoria Murat,
Laura Garcia and Beto Almeida
Graphic project
Cris Inoue, Pedro Mattos,
Daniela Moniwa and
Renata Rodrigues
Images and illustrations
are not for commercial use
Credits
Photography
Page 4 // Flavio Meyer
www.flaviomeyer.com.br
Page 20 // Insper

Branding a key factor for M&A deals

Branding a key factor for M&A deals

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