Coty on Avon: Identity Issues Abounding

I admire the folks at Coty for stepping up opportunistically and pouncing on Avon.  This will be a very interesting deal to watch if it happens. Can you think of a company that has a more distinct heritage and indentity than Avon?

Avon sells primarily its own products through a fleet of indepenent salespeople (with fully 80% of its sales coming from outside the US).  Coty sells licensed and branded products (including Calvin Klein and dozens of others) primarily through retail chains and department stores.

The situation is made even more interesting by a couple of facts that have lots of potential for head spinning:

  1. Coty had previously been in discussions to sell itself to Avon.  Those discussions went nowhere so Coty turned the tables and went after Avon.
  2. Avon is about two and a half times bigger than Coty.
  3. Avon has huge potential liabilities related to overseas bribery and corruption lawsuits (making valuation a crapshoot).
  4. Avon is in the process of hunting for a new CEO, a process that Coty has pledged not to interrupt.

    Good-bye Tomorrow?

I look forward to watching this deal unfold and would welcome comments from anyone with any inside scoop on it.

Making 1 + 1 = 1

Title get your attention?  Mine too.

The Merger Verger stole it (well, “borrowed” it) from a recent study published by the folks from Knowledge@Wharton dealing with the topic of “identity” as it impacts value creation in the process of a corporate merger.  Authors Hamid Bouchikhi (ESSEC Business School, France) and John R. Kimberly (Wharton) lay out four distinct approaches to identity in the integration process:

  • Assimilation
  • Confederation
  • Federation
  • Metamorphasis

These approaches differ in their degree of retention or replacement of legacy corporate identities and establish the overall framework for the degree and type of integration.

The study is a worthwhile read for all integration practitioners. Click here for the full 24-page study report or here for a shorter write-up on it.  As always, comments welcome.


The authors also cite examples of situations where the integration process was pushed ahead TOO fast, a problem that runs counter to the norm (and could be an extremely interesting topic for their next study: when to act the tortoise and when to act the hare).


“For one plus one to make more than two, at the economic level, it is necessary that one plus one make one, at the psychological level.”

The merging of companies will only be successful when the employees of the merged entity “feel a sense of belonging to a single enterprise with which they can identify and to which they are motived to contribute. This is particularly true when one organization acquires a competitor; all of a sudden the enemy is on your side.”

Today’s illustration from my road map collection (no topical rationale).