The implications for brands in the face of corporate acquisitions

March 19, 2020

M&A activity surged in 2019 with the value of takeovers estimated at $3.9 trillion, according to data provider Refinitiv. In every one of those deals, one of the decisions that needed to be made was: what do we do with the existing brands?

Four recent acquisitions give four different answers to that question:

  1. Maintain the acquired brand: When Morgan Stanley announced the acquisition of ETRADE, they cited the “iconic brand” as a reason why ETRADE would continue to operate under the Morgan Stanley umbrella.

  2. Retire the acquired brand: Security brand McAfee plans to retire recently acquired Light Point Security, folding the team under McAfee and integrating its technology into existing products.

  3. Form a new brand (Part 1): Real estate powerhouse Corcoran Group recently announced the acquisition of two regional agencies. The newly merged entity will be franchised as an affiliate and called Corcoran Global Living.

  4. Form a new brand (Part 2): Customer engagement platform Freshworks acquired startup AnswerIQ. Branding is still in flux, but the name FreshiQ has been floated as an option.

To put that question in traditional brand architecture parlance: are you building a branded house, a house of brands or something in between?

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Brand architecture is the definition of the number, type, roles and relationships of brands deployed by a company to address its markets. Your brand architecture approach should be a reflection of your business and brand strategy. For example, if you’re looking to position your brand for a strong IPO, a branded house may be the way to go. If, on the other hand, you have multiple offerings targeting drastically different audiences all with unique cultures, house of brands may be more your speed.

In addition to providing structure around how you go to market, brand architecture guides how you incorporate acquisitions.

Returning to our initial question, there is no one right answer. Acquisition brand strategy should be determined by your brand architecture and a number of other considerations – some of which may cause you to reevaluate your chosen architecture approach. Some questions to ask include:

In a best-case-scenario, these are questions you will ask prior to completing the merger or acquisition. The reasons for that are twofold:

  1. It can help ensure this deal is the right move for your company. For example, if your business strategy dictates a branded house approach, a brand that has a completely different culture and target audience might not be the right fit—even if they have a similar offering.
  2. Reaching consensus prior to announcing the deal can simplify and clarify the transition, ensuring all parties are communicating consistently, customers are hearing a single coherent story and the resulting brand or brands can quickly move in the right direction.

It is a given that there will be some amount of equity in each of the existing brands. By establishing and then successfully executing a transition plan – which can include a gradual adjustment over time to accommodate equity with internal and external stakeholders – you can minimize disruption and maximize incremental value.

About the author

Laura Scharf is an experienced strategist who has played an integral part in (re)branding and activating dozens of brands. From leading discovery—including IDIs and competitive audits—to crafting authentic, differentiating positions to defining architecture and messaging, she brings creative problem-solving and grace under pressure to all her projects. Current clients include Edwards Lifesciences, Gore, Mastercard, ACA Compliance Group, Hartford Steam Boilers and Trinity, among others.

Before joining Tenet, Laura was a strategic account director at Starfish and a brand strategist at TippingGardner. Her expertise spans B2B, B2C, and non-profit with a particular focus in professional services. She has an MBA from the Leonard N. Stern School of Business at New York University.

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