The Art of Naming Companies
by Carla Cichos
We've changed since our last iQ report. Iradesso Communications became Bryan Mills Iradesso in February after merging with Bryan Mills Group of Toronto. After playing the name change game ourselves, we started thinking about what's behind other company name changes. What are the reasons behind a decision to change a corporate identity? What does it mean to investors? What differentiates a good name change from a bad one? We have tried to get the bottom of these questions.
A company changes its name for several reasons. One common reason for changing a company's name is due to a merger. Many companies use this opportunity to move in a new direction. Remember when Midnight Oil and Gas Ltd. reorganized to form Daylight Energy Trust? At the very least, going from Midnight to Daylight suggested a considerable transformation within the company. Other companies may choose to retain what they can from a previous entity. Bulldog Resources predecessor was Bulldog Energy, before it entered a plan of arrangement with Crescent Point Energy Trust. This can signal that the management team is happy with the standing gained with the previous company and is keen to continue on a similar path of success.
Another motivation for changing a company name revolves around the attempt to focus, define or describe a business. The name North Peace Energy, for example, reflects this company's early-stage oil sands play in the Peace River Arch area of Alberta.
However accurate and descriptive a company name was when it was first established, it can also become outdated or limit the company's expansion. For example, names that reference oil and gas, such as "Petro," can affect how a company is perceived when attempting to expand into other industries. If a name is too descriptive of an area of focus, whether it be geographical or industry-specific, the company may decide to re-brand to underscore its intention to change, refocus or expand.
This leads us to our own recent name change. Bryan Mills Iradesso may not be the catchiest name around, but it was well thought out. In his book The Invisible Touch, Harry Beckwith says "Companies win on brand recognition." In our case, by combining our names, both Iradesso Communications and Bryan Mills Group get to carry forward well-established reputations in both Toronto and Calgary. At the same time, retaining elements of our names helps reassure clients that although the company name has been transformed, our policies and core values have been carried through to this new entity. Beckwith also says companies should keep their names short - eleven letters, or four syllables maximum. We didn't exactly hit the nail on the head with that one, but we did establish BMIR as a short form of our full name. BMIR is used in our website address and our email addresses to make life easier for the people who communicate with us the most.
Overall, investors and the public need to determine the significance of a corporate name change based on a corporation's track record and projections for the future. If a company is simply re-branding so its services can be better understood by the public and potential clients, this can be an important move towards achieving long-term success. Alternatively, some name changes can simply be a Band-Aid solution for a company whose identity has justifiably negative connotations. The reasons for establishing a new identify are abundant, but by stopping to think about the rationale, investors may be learning a key piece of information about a potential investment opportunity.
