From a customer perspective, the most visible way that companies unite following an acquisition is through a name change. Sometimes the switch is gradual, as when Franklin Bank joined First Place Bank, its parent company, in 2004. For the past five years, signage, statements and other bank documents read, “Franklin Bank, a division of First Place Bank.”
In April, Franklin Bank adopted its parent company’s name entirely.
For clients and employees, the change means little more than a different name on branch offices. The bank will continue to operate as it always has. Essentially, the name-change decision made sense as the bank’s territories grew together.
“Franklin Bank has a highly recognizable name in the southeastern Michigan marketplace and, over the years, the geographical gap between First Place Bank’s primary territory and ours has closed as our company has expanded,” says Craig Johnson, president and CEO, Franklin Bank, Southfield, Mich.
Merging companies often realize infrastructural efficiencies and branding advantages when they operate under one name.
Still, communication with shareholders and the community is important when making a change that customers can see so plainly. Many companies that have undergone acquisitions and mergers make tough decisions about a name change as it relates to branding, internal operations, efficiencies, savings and other considerations.
Smart Business spoke to Johnson about factors that go into a name-change decision and how companies can effectively make the transition to a new brand.
Does an acquisition always mean a name change will result?
Not always. In most cases, a parent company will immediately or gradually change the acquired party’s name to reflect the corporate brand. The way a name change is handled depends on the brand recognition of all parties and what a change could mean for business. For instance, a company with a strong reputation in a marketplace and a loyal customer following may require a transition name. This was the case for Franklin Bank. Because our parent company’s territory did not overlap with ours at the time of acquisition, it made sense to retain the Franklin Bank name for some time. Over time, we altered product offerings so they were the same for both Franklin Bank and First Place customers. For customers and employees, the acquisition was seamless. We have been subtly introducing First Place Bank to our longtime customers for years. Now we’re going to make the formal change. This is a common strategy for companies in our position.
What benefits can a name change bring for a business?
From a branding perspective, it’s back to the old math lesson: The whole is greater than the sum of its parts. Rather than branding the company as a division of the parent, the entire business can make a greater impact with a unified name. Just in advertising and marketing efforts, the company can benefit from efficiencies in terms of sheer paper: statements, letterhead, receipts, promotions, brochures and many other items. There are clear volume purchase advantages, not to mention the internal time saving of unifying processes that relate to messaging. One name keeps it all simple. But as noted, many companies gradually work toward that change so the marketplace understands that they can still depend on the company for the same services. Also, there are emotional attachments to long-standing names. People in general do not like change. Some corporations decide to ease acquired companies into the parent name to maintain consumer confidence.
How does a company prepare for a name change?
A company can’t communicate enough during this time. Send a letter to customers explaining the change and what it means — and perhaps most important, what the change does not mean. If clients will continue to work with the same personnel and conduct business in the same way, say so. Dispel myths and fears customers may have about the change. Meet with employees regularly to discuss how to present the change to clients and how to respond to questions. Provide a script to help guide the conversation. If necessary, meet individually with salespeople and employees who have direct contact with customers; listen to their concerns about communicating the change and offer solutions. It’s critical that everyone be on the same page so the change can be seamless for clients.
What does the Franklin Bank name change mean for employees and customers?
This change is purely branding. Customers will bank at the same locations and see the same faces when they conduct business. The difference is that the building they enter will be called First Place Bank. Employees will experience no organizational change. Essentially, this ‘new’ name is a belated branding result of our acquisition by First Place Bank five years ago. We’re pleased with the growth and market expansion the company has experienced since that time, and the name change is a reflection of the merger’s success.
CRAIG JOHNSON is president and CEO of Franklin Bank, Southfield, Mich. Reach him at [email protected] or (248) 358-6459.
