In the first of our three-part series on brand portfolio strategy and architecture within M&A, we discussed the critical role of the corporate brand in M&A endeavors. In the second part, we focused on brand portfolio strategy at the product/service level, post-M&A. In this post, we’ll examine how to successfully transition to a new brand portfolio and architecture, post-merger.
What’s at Stake?
When determining the optimal migration path from the current to desired future state portfolio, it’s vital to weigh risks to the business with projected costs. Risks often stem from making substantial changes to the portfolio too abruptly, and include issues such as marketplace confusion, customer alienation, and ultimately lost business. The costs associated with transitions are often related to making multiple changes to visual identity over time, which can be quite high especially in some B2C businesses such as CPG and retail.
Following is a high-level approach for determining the optimal post-M&A migration path to a desired end-state brand portfolio strategy. While there are meaningful differences between migrating corporate brands versus product/service brands, many of the considerations apply to both.
Determine Ideal End-state Portfolio
With every merger or acquisition come new decisions about brand portfolios. Start by identifying what the ideal future state portfolio should look like given the new business reality. What brands should represent the business once we complete the merger? How does this choice affect our corporate identity?
Companies need to identify the drivers of value and understand how the merging companies can combine their assets to maximize potential. Uniting two businesses may mean merging two disparate sets of offerings, or there may be a fair amount of overlap. Regardless, decisions need to be made as to how to brand the combined new offering. Researching existing brand equities and drivers of customer loyalty will help establish the optimal set of brands, and the right relationship (if any) between them.
Identify Immediate Risks to the Business
From a corporate brand perspective, the greatest risk may be customer alienation (especially, but not only, for B2B organizations). Will customers not want to do business with the new corporate entity, or will it be a non-issue? While the answer to this question may not necessarily influence your long-term decision regarding corporate brand, it may very well affect how you choose to transition from a legacy to a new corporate brand.
Regarding product brands, the highest risks tend to be abruptly rationalizing/eliminating brands without ensuring a different portfolio brand will capture that lost revenue. Other “softer” risks associated with portfolio changes include confusing the marketplace by not sufficiently communicating changes to the portfolio. As with the corporate brand, while these issues may not influence the ultimate (i.e., long-term) brand strategy, it likely will have implications for how quickly—and in what manner—the transition takes place.
Determine the Optimal Migration Path (How to Move from Point A to Point B)
Making material changes to brand portfolios is a process that often requires shifting perceptions and assisting customers on a journey. It must be done strategically, with the full support of business, marketing, and brand management resources within a company. If not done right, companies can tarnish valuable brand equity and ultimately lose customers and profitable business. Needless to say,this completely undermines the value the M&A deal was intended to create.
Interim brand architectures can help mitigate risks to the business, particularly at the corporate level. In such cases, a provisional co-branding strategy is often a solution. For example, the FedEx-Kinkos co-brand preceded an eventual move to the Fed-Ex Office descriptive brand. Also, BP-Amoco was a temporary transition to the eventual end-state: BP master brand (with Amoco eventually being “demoted” to a product brand).
At the product level, an endorsement strategy is often effective in mitigating confusion and risk. This can take the form of an “XYZ Company” endorsement. For example, following its acquisition of Carrier, United Technologies continued to use Carrier as a product brand but endorsed it as a “United Technologies Company.”
Establish Target Metrics and Continuously Monitor
Given transition/migration strategies are by definition, temporary, it’s important to determine in advance exactly when it will make sense to migrate from the transition architecture to the permanent architecture.
Establishing target metrics can help accomplish this goal. Metrics will vary based on the mitigated risk but can include measurements such as brand awareness, familiarity, consideration and purchase intent. The idea is that once a minimum threshold has been achieved for the metric in question, it will likely be safer to transition to the end-state brand architecture.
Don’t Be Afraid to Seek Outside Help
Granted, M&A opportunities are often planned behind closed doors. But sometimes as part of the due diligence process, it’s beneficial to seek an outside perspective from a trusted brand strategy consultant—someone to help project the brand aspects of the proposed M&A and provide options of how the brand can best be realized. 
