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Maximising brand portfolio strategies for merger and acquisition success

During the last decade we have seen a significant increase in merger and acquisition activity (M&A), a trend which is likely to continue in the wake of ongoing cost pressures.

For the individual companies involved, the net effect is a plethora of products, brands and locations with complex heritages and differing levels of value. Companies, financial advisers and investment bankers must consider many complex factors and realise that the brands involved are also important to manage in the process.

From my analysis and experience over the years, it is clear that this - the brand - is not always managed well and is often only considered when the ink has dried on the contracts.

No matter what form the merger or acquisition takes, or the basic objectives it’s been designed to deliver, decisions have to be made that will ensure the overall brand portfolio of the resulting company is effective. Easier said than done, especially when we consider a large scale acquisition such as Unilever and Bestfoods which resulted in a portfolio of 1,600 brands.  

Therefore as marketers, we need to be clear to all participants that the earlier the topic of branding is in people’s heads, the greater the opportunity to use the brand meaningfully for the transaction – and ultimately make the M&A a success. After all, the brand is what the public sees, so making the most of these assets within the portfolio will contribute to the success of a merger or acquisition. However, this prompts a fundamental question: How does one do that?

Like any critical decision in business, it’s best to follow a process.

A brand portfolio strategy can be used to evaluate each brand and look at what role they play in the M&A, asking questions such as, ‘how do they talk to the audience and each other?’ The portfolio strategy will help organise the brands by looking at them individually and in the context of their relationship within the entire portfolio. The objective is to create synergy across the brands and reduce potential identity damage, which can result from the M&A process.  

The common knee jerk reaction is to rationalise the portfolio, taking the assumption that less is more. But don’t assume it’s got to shrink, as you may find the brand you’ve eliminated was actually the one with the most potential.

Once a brand portfolio strategy has been agreed upon, having evaluated the pros and cons for different rationales, it is important to ensure that the existing product and company brand names fit with the brand strategy, so the newly combined company and its product offering can be coherently communicated.

After all, an effective M&A shouldn’t occur just within companies and financial institutions. It must also occur out in the open with a well-articulated, expertly executed brand portfolio strategy and supporting communications for both internal and external audiences. This can help mitigate risk and foster success.  

To read more about managing brand portfolios for successful mergers and acquisitions download the ‘Merger and Acquisition’ whitepaper.