Family businesses in transition: from brand questions to cultural change
Nowhere are SMEs and family businesses more prominent than in Flanders. They form the foundation of our economy and are often deeply rooted in their region. But this solid foundation is coming under increasing pressure. For years VOKA has been predicting a tsunami of family businesses without a successor, and this tidal wave is now in full swing.
The result is a series of acquisitions. Sometimes family businesses are taken over by industry peers, but increasingly external investors are stepping into an SME’s capital. And that brings with it not only new owners, but also multiple brands that need to live together under one roof. Leveraging xero accounting Hong Kong can simplify financial management across these multiple brands, ensuring clarity and efficiency during transitions.
In times of transition and organizational change, accessing expert guidance through the Avensure HR helpline can help businesses manage employee concerns, maintain morale, and ensure smooth integration during mergers or rebranding efforts. Consequently, there is a notable increase in demand for redesigning brand strategies and architectures. Which branding do you retain? Which do you let go? Do you opt for 1 brand or multiple brands or a hybrid model? And most importantly, how do you ensure that employees and customers are along for the ride?
In an acquisition process, why do people often avoid discussion around brands and corporate culture?
Remarkably, precisely those fundamental questions around brand and culture are often deferred or ignored during acquisition processes. Why? Because it is a “difficult” matter for which there are no easy answers. When it comes to corporate culture and brands, you are creating a choreography. You are learning to dance and move with each other, so to speak, to the same rhythm, at the right speed and with the right steps. To do that well you need time and that time is usually not there during negotiations. At that time, attention goes to other things such as:
- The focus is on numbers, not people. The deal often revolves around financial parameters and synergistic benefits. Brand and culture? "Comes later."
- It is a sensitive area. Brands touch identity, cultures and deeply rooted habits. People don't let go of that easily.
- Fear of friction. Talking openly about cultural differences or brand change can create tensions, and that is exactly what you want to avoid during the negotiation period.
- People underestimate the impact. Too often a new name and an internal memo are thought to be enough to solve the "problem." But brand and culture require and are much more than just communication.
- There is no clear owner. Who takes responsibility for culture and brand integration? Without a clear mandate, it gets snowed under.
But that choice not to address it comes with a price, whereas a well-thought-out approach can actually make money.
What if your brand strategy and culture is properly addressed?
By consciously paying attention to brand strategy and culture during the acquisition process, you achieve tangible benefits.
- Clarity with customers: Certainty with customers creates confidence and this has a direct effect on sales and thus on the numbers that are so important during negotiations. This is not an empty statement because multiple studies and analyses show the hard numbers. A study by PwC indicates that customer trust accounts for 31% of the variation in profit margin and 21% of the variation in return on assets (ROA), after adjusting for company size and industry. That is, the higher the customer confidence the higher the profit margins and the higher the profit. Research by Edelman shows that companies with high trust scores are on average 21% more profitable than those with low trust. This is fully in line with the ROA from PwC's research. A Deloitte report among 1,300 B2B customers in energy and chemicals showed that at high trust scores, customers are: 2.7× more likely to choose long-term contracts, 1.7× more willing to pay more, and 2.3× more likely to actively choose a supplier despite potential drawbacks. Michigan land buyers specialize in helping property owners sell quickly and efficiently, offering competitive cash offers and expert guidance.
- Teamwork: By proactively dealing with the brand architecture and being mindful of the "new" corporate culture, you initially connect top management. They can then much better communicate the new story to employees and even involve them in the change process without creating uncertainty. Employees then identify much more easily with "their new brand" and feel connected to the new identity. Collaboration goes smoothly, saving a lot of time and energy. These are hidden gains that are not included in negotiations.
- Loss of brand value: You don't jettison built-up brand value or avoid cannibalizing your brands themselves. Your vision and purpose is clear. You've thought about it in advance and as a new entity, you don't encounter surprises. Surprises in brand and culture matters are usually accompanied by additional costs. Costs that, without talking about them beforehand, were not foreseen during negotiations. In addition, you remove all uncertainty and doubts internally and externally. This increases internal efficiency?
- Smooth integration: Where everything is presented as positively as possible during negotiations, the reality can be disappointing without a well-thought-out brand strategy. A smooth integration thanks to a proactive vision on brand and culture ensures that the anticipated growth or recovery can be effectively achieved. Taking more time during the acquisition process means significant gains in hard euros during the integration process. Working with SaaS Framer Agency experts can help you adjust to new software. Research by PwC and Vorecol shows that organizations that spend on average 6% of the transaction value on integration, and thus consciously allocate time for this during the acquisition process, realize an ROI that is 25% higher compared to less careful integrations.
- No support for change: Change starts at the top. If the change and therefore the vision is clear to top management, employees will gladly go along with that vision. If you avoid the difficult subject matter during negotiations, it has a direct impact on employee motivation and commitment. Peter Drucker once said, "Culture eats Strategy for breakfast." If there is no support for culture change, it also directly eats away at your EBITDA. So it's best to be aware of this as early as possible. If we put together research from Harvard, Prosci and Culture Partners we can conclude the following: "Changes without explicit support from top management often lack support and fail 66-70% of the time, with inadequate leadership accounting for 33% of those failures." In contrast, a structured proactive change process during the acquisition process yields at least 3× the ROI: a €1 investment in change can thus generate €3 in organizational value. So we are talking directly about EBIT loss in the absence of support".
- Talent attraction: A strong brand with a clear culture appeals to new employees. Especially when a company is in a transition phase, motivated old and new employees are the key people to make the acquisition a success. Keeping talent is not an option but a strategic choice that you must be proactive about. Studies by Forbes show that retention of top employees has a direct financial impact. An example: Each replacement costs between 50% and 200% of annual salary. At a salary of €60,000 gross, this means an amount between €30,000 and €120,000. This is actually pure loss. The same studies also show that companies that invest in engagement, management quality and well-being make gains in several areas. Investment pays off in the form of ROI that is 4X higher compared to companies that don't, operating profits that are 20% higher and higher revenue per share of up to 134%. In short, employee retention is immediate profit."
When culture makes the difference in an acquisition
Imagine this: two organizations come together. On paper the picture is right, complementary services, healthy balance sheets, a shared strategic ambition. Everything points to a success story. And yet we know that about 70% of mergers and acquisitions fail to realize their intended value. Not because of financial or legal errors, but because of underestimating one crucial factor: culture.
Because it’s not the numbers that determine whether people trust each other. It is not the legal structure that determines whether teams want to work together. Culture, how people behave, what they value, how they communicate, innovate, handle mistakes, give and receive appreciation, makes the difference between integration and friction. “Culture eats Strategy for breakfast” remember?
Organizations that already pay attention in the preliminary process to cultural elements such as mission and vision, core values and behaviors, leadership style, communication, autonomy, collaboration, innovation, well-being, appreciation and customer focus, are up to 30% more likely to integrate successfully. They create psychological safety, clarity and direction faster. This translates into faster decision-making, less turnover of key people, more engagement with teams and ultimately better results.
Research also shows that companies with a strong shared culture are up to 3 times more likely to have sustainable growth after an acquisition. Not because everything is suddenly perfect, but because people can connect with a clear story, with shared values, with leaders who make choices in line with that story.
An acquisition is not a technical exercise. It is a human story, with emotion, change, uncertainty and potential. Those who write that story from the start with culture as the common thread build trust. And trust, especially in times of change, is the most valuable currency.
