Investors are breathing new life into the well known Danish developer brand Pihl & Son which went bankrupt in 2013. Now owner and board member of LM BYG, Carsten Mindegaard, has teamed up with an investor and bought the intellectual property rights from the bankruptcy estate. Together they are creating a new company under the name Pihl & Son A/S. They are buying into a long and proud history of Danish construction. But they’re also buying inevitable challenges concerning a reputation under serious pressure towards the end in 2013 as the company was forced to declare bankruptcy.
But can you revive a historic brand like Pihl & Son or is the project dead in the water before the brand building starts? Can we find inspiration by this bold move and what would the new management and owners have to do in order to create a succesful brand? As research on crisis situations have shown, the leadership actions made by the new owners in the first year or two will have a decisive impact on the company reputation and future brand value. For this venture to succeed, it is crucial that the Pihl & Son brand is relaunched in a way that exploits the authentic strengths of the old brand, while addressing the weaknesses that caused the company to fail in 2013.
A bold move and potentially big payoff
The Danish contracting and civil engineering company Pihl & Son was established back in 1887 and has some of Denmarks most prestigious projects in their portfolio, like the Copenhagen Opera House and the Storebælt Bridge. In the years leading up to the final crash in 2013, the company experienced devastating losses on some of their projects. Among the most unprofitable was a big hydroelectric plant in Panama, which resulted in the largest deficit in the company history amounting to 198 million Danish kroner in 2011. The project was delayed and added extra expenses due to problems in the local area and disagreements with the developer. By 2012 the company deficit totalled 473 million.
You would think that a massive deficit like this would be a turn off for most investors. And if that didn’t do the trick, the reputation of the otherwise renowned Pihl & Son took a hit after a long series of delays and setbacks during the construction of the Inner Harbour Bridge connecting Copenhagen’s Nyhavn and Christianshavn districts. Still, the purchase of the Pihl & Son brand may prove to be a bargain for the new owners. Besides name and logo, they have acquired the brand value accompanying the 100 years of ambition and skill connected to Pihl & Son – provided that they know how to use it.
Building a new brand from the blueprints of the former
When the investors took over what was left of Pihl & Son, they got quite a bit of attention. I was interviewed by several media on the case and in the days after the story went out, I could count more than 30 business-, finance- and other news media covering the story. That talks a great deal about the importance of the brand and what kind of attention you can buy your way into by overtaking a well-recognized brand – bankrupt or not.
The new owners inherited the company identity with all it’s good and bad aspects. In acquisitions like this one, the outcome is dependent on the culture of the buyers being compatible with that of the acquired company. If the two cultures do not match and support each other, important value is lost and in the worst case scenario, they clash, making synthesis and company development impossible (read more on the subject in my book Den autentiske virksomhed, page 45-46). In this case, the new owners have hired the former Pihl & Son CEO as their new chief executive which would give them a very good chance at rebuilding the company and – to the degree they want to – the organizational culture.
As a first step towards successfully relaunching the Pihl & Son brand, the new owners and management has to identify and explore what makes this particular brand stand out. One of the obvious strengths of the former Pihl & Son was its ambition. Even though the Panama-adventure failed, the project showed ambition and audacity. The total contract value added up to 2,1 billion Danish kroner, enough to make you lose your breath for a minute, and the impressive hydroelectric plant is expected to cover 15 percent of the yearly energy demand of Panama. That’s the kind of story you would want your construction firm to stand for, less the mess and financial challenges.
When building the new Pihl & Son brand, the management has to understand the authentic strengths of the company and find a way to activate them in the new setup. They’ve stated in an interview that they will focus on the Danish market, but surely, they have the opportunity to build something larger. And the recognition of the brand name which has been built since 1887 will help them win their first orders quickly. But what about the criticism that they are already feeling from the press and which will surely return? Stories about bad working conditions for the employees on the construction sites as well as problems with financial control are likely to surface again as soon as they open doors and start building.
Bridging the gap between the past and the present
An authentic brand expresses continuity of identity and history is an important brand asset if it is activated in the present. Exploiting the full potential of buying a historic brand like Pihl & Son means utilizing elements of its brand story in the new company. Elements like the founders original idea, the purpose of the company, accomplishments through time and the cultural traits that makes this business stand out from the rest. For the new owners of Pihl & Son to release the potential of their acquisition, they will have to bridge the gap between what was and what could be.
Copenhageners will remember the troubled Inner Harbour Bridge. One of the problems with the bridge – known as the “Kissing Bridge” due to the “kissing” movable bridge parts – was an engineering error in the dimensioning of the bridge. Ironically, the error meant that the two parts of the bridge didn’t meet correctly and couldn’t actually ‘kiss’ and close. And for two years the locals couldn’t use the bridge because it didn’t connect. Just like the Kissing Bridge, the Pihl & Son brand faces the challenge of making its parts meet – the past and the future.
And like the bridge, if it doesn’t fit perfectly, it doesn’t fit at all; the new management has to make sure that it exploits the proud identity and reputation of the firm while making sure that it fits with new initiatives that demonstrate, how the mistakes of the recent years can transform into a new order. Not only for the reincarnation of the company but possibly as a new standard for the industry. Imagine the Pihl & Son brand setting the new standard for employment conditions. Or that they develop methods for risk management in the construction industry. The brand would span the strength and pride of Danish building history and the creation of a new rendition of a modern construction company brand. I’m sure that I will be watching the company development along with the press, former employees and the construction industry as the new brand owners enter the stage and reveal the new version of the brand during 2017.