By Melina Seeam (November 2020)
Due to the pandemic a global economic slowdown is occurring at a worrying rate. Troubled by the economy, companies are crumbling and selling their shares. Those that are still here are trying to survive on unstable grounds. In Namibia, we saw an unexpected rise in the number of Covid-19 related cases during the past few months. In the essence of a merger we look forward to combining the efforts of all facets in the business environment. Strategy, research & analysis and execution are the three key components to seal an M&A deal. Often we find ourselves under the assumption that mergers and acquisitions are solely controlled by operations and finance teams, however it is clear that marketing and finance do complement each other in light of shaping mergers and acquisitions. Marketing is such an integral part of this ownership transaction of the financial market and its value should not be undermined. In fact, research & strategy are themselves branches of the marketing department that support the M&A process.
As a part of the first phase action required, we can already see the crucial role of marketing in the corporate finance environment. M&A has the ability to act as a business solution in these hard times and step in and transform the weakening standalone firms into synergies with the correct methodologies applied, including that of marketing.
Before we can explore further, we should first understand what motivates M&A. Actually the whole journey transpires from looking for a successful exit from one business into another so as to extend product lines, explore cross selling opportunities, reduce tax liability, overcome competitive disadvantages, or complete a vertical integration to help maximize financial performance.
We realize that many sectors are suffering because of Covid-19 and so has marketing. By targeting M&A, marketing could emerge from a standstill state and transform at an amplified rate to help brands achieve growth. Efforts on the marketing level strongly supports the operational and financial activities of the business for M&A. The performance (success or failure) of an M&A is traceable to this support. According to a report by McKinsey, marketing tasks should be focused on the six Ss in order to capture revenue synergies for the proliferated execution of the financial transaction. These are outlined as follows:
Story. Define the new organization’s value proposition
Segments. Refresh your view of the market
Service. Delight your most valuable customers
Share. Deliver consistent value over time
Science. Take an objective, fact-based approach to setting brand strategy
Scope. Tackle less, not more, on and after Day 1
In Namibia, M&As are regulated by the Competition Act. To remain in line with international best practice standards, matters of public interest are evaluated before approval is granted. It is based on whether the impacts will fall on:
· A particular industrial sector or region
· The ability of small businesses, or undertakings controlled or owned by historically
· Disadvantaged persons, to become competitive
· The ability of national industries to compete in international markets
An analysis of the M&A strategy documentation will provide strong insights on how everything else will follow from then on. With the facts analysed, we are able to pick up on potential threats which can harm the merger in the future if not addressed in due time. In addition, marketing will develop effective communications approaches to create trust and prove the critical value of the M&A on both corporate and public levels. A successful and compelling deal is expected to unfold, then deliver the value proposition and its narrative to generate above-market growth.