For spin-offs in particular, independence from the parent company alone will not make a successful company. The spin-off must define who it is, what it stands for, its values and culture, and the value it will deliver to its customers. That means having a clear and powerful brand narrative that differentiates it from competitors and how it behaves with customers and other important audiences.
Your brand story is crucial when considering transactions. All too often, branding is an afterthought to deal-making. Yet brands play a huge role in value creation during transactions, from spin-offs to acquisitions or mergers. A company’s image and impact present storytelling opportunities that will help stakeholders engage and foster understanding and excitement about your brand.
Here are some best practices for spin-off branding and communications:
Define the Brand Narrative
The first question regarding a spin-off is often, “What will you call it?” – then there is an even bigger underlying question of “What do you want to be?” Getting those answers right will directly influence the financial valuation placed on the new business. As stated above, it’s important for audiences to understand the value of the spin-off brand versus the parent company brand.
For example, one of our clients, a B2B company spin-off management team, spent considerable time developing a new brand narrative and investment story. The team knew it would need to build credibility with a new group of investors and stakeholders and educate them about the unique characteristics of the business and the market. This involved discussion with leaders from both the parent company and the spin-off company. The discussion helped the spin-off’s leadership build a more compelling brand narrative story for the investment community, customers, employees and key stakeholders. This ultimately led to a successful public listing, understanding and valuation for the company.
Assess Branding Needs with Cross-Functional Teams
If you are going to explore a spin-off, the right time to start the assessment process is at the very beginning. Having a broad perspective about the spin-off’s needs will open possibilities for increasing the value and avoiding risk. Any spin-off should assemble a multi-functional team that will represent the new organization’s branding needs. The team should include all significant business functions, including marketing, public relations, IT, HR, operations, legal and investor relations. Team members from each area will be able to surface issues impacted by branding, set realistic lead times, advise on department-specific activities and resolve potential problems along the way.
The brand also needs to assess its audiences. Are there new audiences? New customers? Investors? Employees? Business partners? What are your audiences’ concerns around the spin-off? Remember all your audiences are connected. Ignoring any part of your audience segments can influence how others perceive your brand.
Leverage Data and Analytics
When crafting a brand narrative and messaging, organizations must go into depth and leverage data and analytics. To successfully undergo a spin-off, companies need to delve deeply into the leadership team’s vision for the new organization’s story. The messaging needs to be authentic, occupy a “white space,” be simple and free of jargon, be brought to life with stories and anecdotes that are timely, informative, and relevant, and be delivered across multiple channels.
Unique, compelling content is a critical component of getting employees, partners, customers, reporters and business leaders interested in the organization’s story. To generate this content, it’s a good idea to audit and analyze the industry and competitive landscape, media conversations, social chatter, analyst reports, etc. to inform what space the new entity wants to own. This information will help to build and drive the communications plan.
Develop a Long-Term Communications Plan
Many times, a spin-off falters from a lack of communication. Companies need to communicate not only to investors and customers but also to employees and the media. A strong communications program for internal and external stakeholders must be prepared weeks in advance to launch day. At the same time, your team should plan for the first 12 months after the launch day as well. All audiences will want to know the new entity has a sustained and robust plan and culture.
Introduce the new company’s brand story to current and prospective investors as mentioned, especially if you are a publicly traded entity. This process doesn’t end after the spin-off. Ongoing brand communications with investors will lay the groundwork for future financing rounds or potential mergers. The new entity must also communicate with its customers. Competitors will look at this disruption that puts customers into play. Frequent and open communication with customers is the best way to retain them and acquire new ones.
Prioritize Employee Trust
A critical question in most spin-offs is how to retain talent since every company wants to keep its best people, particularly during times of transition. The most successful spin-offs understand this is critical. The company must provide frequent employee communications to reduce culture shock and the amount of distraction. Employees of the new company entity need to become brand ambassadors. If they don’t believe in the new company, neither will your investors or customers.
Employees need to assess and believe in the culture and its capabilities that will make the company successful in the long term. Questions that spin-off leaders should consider include: What organizational structure is required? What are the roles? Who can be in the role? How will that change going forward? How does it impact culture? Will legacy culture remain? Or will it change? If so, what is needed to help with the cultural shift?
Spin-offs can give the parent and spin-off companies more freedom and improve their performances if the leadership works together. Hence, leadership needs to consider the brand narrative, branding needs, communications, talent and cultural changes that each entity will require to succeed for the long haul.
Tom Smith is a strategic, highly skilled corporate communications professional with a proven 24-plus-year track record of leading and implementing corporate campaign programs. He has led numerous multi-million-dollar global accounts and as president of Allison+Partners’ North American corporate practice, he brings deep capability in numerous industries, including financial services, hospitality, professional services, technology, education, healthcare and industrial supply. His specialties include integrated communications, corporate brand positioning, thought leadership, executive visibility, B2B marketing, influencer management, media relations and investor relations