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| The Diamond Foods portfolio |
Brands have great potential to screw up acquisitions. They often represent a big part of shareholder value (well over 50% in the case of brands like Disney or Coca-Cola) and, at the same, they're notoriously difficult to value accurately. Whatever value they have is also significantly affected by who owns them and what they do with them. A good brand architecture plan can't eliminate these inherent challenges but it can at least keep brands more front and center in the acquisition process and help companies move quickly post-acquisition to integrate new brands into their portfolio.
Companies that generally have the easiest time absorbing new brands into their portfolio are "house of brands" companies like P&G. These companies can slot new brands into position alongside their existing portfolio. In the article I talk about the success that Diamond Foods (a Landor client) has had with its new acquisitions. Each new brand it has acquired has helped the company extend its geographical and retail footprint giving it a strong probability of increasing its overall shareholder value.
Companies on the other end of the spectrum have a tougher challenge since the master brand model is inherently hostile to acquired brands. Shareholder value can still be increased if companies are able to transfer some of the equity of the acquired brand and/or use the acquired products and services to enhance its existing business and add more overall value to the customer. But it's definitely more of a challenge.
My three tips for M&A success:
1. Develop a robust, well-articulated brand architecture strategy
2. Value brands based on what they are worth to you (not what they were worth to the previous owner)
3. Plan, plan, plan and move fast to execute once a deal is finalized
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