What is Brand Diligence - and why should it be part of your M&A playbook?

We define Brand Diligence as a dedicated effort to assess the values and the equities associated with a brand.

If you are of the view that brand strategy is a significant contributor to the success of M&A integration (spoiler alert: I am), it would seem wise to make brand diligence part of your thinking.

With “bolt-on” or “tuck-in” acquisitions, in particular — where the targeted product or tech is expected to seamlessly integrate into the customer experience — lack of brand diligence at the front-end could undermine the promise of the entire deal.

A strategic approach to thinking about acquired brands as you would any other asset will help your deal teams unearth unseen opportunities (and identify potential issues) that may emerge with platform add-ons. B2B-focused platforms tend to be most successful when built around a single master brand, so a deep dive into some intangibles like fit and relevance is the secret sauce of smart brand diligence.

A few tips to get started:

1. Assess current perceptions of the brand(s)

  • Qualitative research - in the form of a handful of interviews and small focus groups - will help build a picture of the brand and its related market dynamics. Gaining this insight pre-deal on the QT can be a challenge - but for B2B mid-market firms selling to a highly specific buyer, this type of effort offers a great foundation for brand diligence.

  • A quantitative study can be helpful, too - but depending on the market it may be costly to field original research. If time and money are available, you will likely be able to create some data that will not only inform decisions, but also prove useful down the road as you build consensus or track progress over time. Third-party data may be available - but probably not an exact fit to what you need.

2. Outline the future product portfolio

  • Take the customer view to build a picture of the brand assets side by side. What might this acquisition mean for the customer experience? How does the acquisition enhance the value-proposition?

  • If cross-selling is a big driver, are the brands currently speaking to the same customer? (If not, do you know why? And, is this something you can overcome?)

  • Does the portfolio “fit” together? Is there a logical organizing principle? Where might there be opportunities to simplify the story - and evolve away from one or more legacy brands?

3. Avoid brand promises

  • Avoid over-promising on brand issues with acquired founders. An agreement to maintain an acquired brand may seem like an easy giveback, but the negotiating table is not the place to make strategic branding decisions.

4. Socialize among deal teams and potential transition teams

  • As the deal comes together, tap into internal expertise to explore potential brand scenarios and their implications. If the acquired and legacy brands are to live side-by-side, what’s the relationship and what’s the rationale?

  • Sales and Product leaders will be key internal influencers in driving success; make them part of the process as you build towards the right solution.

5. Outline other elements where brand-related questions remain

  • This can include a range of tangible and intangible factors, including:

    • Geographical issues (i.e. regional differences or language considerations)

    • Premium vs. value positioning: Differences among brands will require thought about if/how to bridge this gap - and what it may mean for the brand portfolio.

    • Voice and tone: This could point to questions around audience, market, messaging style and brand-fit

    • Business model, selling-approach, customer support, platform interface… Put on your customer hat (for the acquired and acquiring brands) to build a picture of the entire experience so you can identify potential issues or gaps.

Acquisitions obviously come in many shapes and sizes - and this is far from a comprehensive set of brand-related questions to consider as part of a brand diligence effort. But it’s a start.

I’ve seen what happens when brand is an afterthought to M&A. It’s not always a disaster, but it often leads to unnecessary confusion or complexity - and, thus, diminished potential. And, when it is a disaster, when a fatal flaw goes undetected because nobody asked the right questions at the front-end, a multi-billion-dollar deal that looked interesting on paper becomes a lighting rod for uncertainty and chaos.

Successful M&A is built on opportunity and vision. With brand diligence as part of your M&A playbook, you’ll build in an understanding of what you are acquiring and how it all fits together - so you and your team can bring the vision to life.

Jonathan Paisner