Three ways master brands can navigate the M&A naming minefield

In the complex, highly charged world of M&As, any number of factors can compromise a deal. The two sides may be unable to agree on a company’s value. Wary investors could sell off their shares, causing stock prices to dive. Key employees might decide to jump ship, clouding the acquisition’s future direction.

Under pressure to close the deal, it’s easy to shortcut one potentially thorny issue: What will the acquired company be called? Failing to address this sooner than later can hurt your brand down the line.

If you’re a master brand (as opposed to a house of brands), chances are you will want to absorb the acquired business under the umbrella of your larger portfolio—and in most cases that means renaming it to reflect the new ownership. That’s what Google and Apple—two highly active M&A players—do with 90 percent of their acquisitions.

Apple acquires sleep tech company

Sounds simple enough. But emotions tend to run high around selecting a brand name, especially for those involved in the creation of the brand. Based on our work with numerous master brands that are conducting M&As, we’ve identified three problems that typically arise during name transitions. Here are some ways to handle each of these challenges.

Trouble spot no. 1: Retaining the name of the acquired brand is a condition of the sale

Dealing with it: Bring brand management into the negotiation process at the beginning to ensure that your interests are protected. We can’t say this strongly enough: Don’t get backed into a corner you can’t get out of later. The integrity of your master brand should not be negotiable.

Agreeing to keep an acquired name during the M&A naming process might be expedient in the short term, but that seemingly small concession will almost certainly cause problems down the road. Transitioning to the master brand name should always be reserved as an option in the negotiation, regardless of how long it takes to carry out the change (see trouble spot no. 3). When a master brand portfolio unravels, it’s often because management has not been empowered to retire names that have outlived their usefulness.

Trouble spot no. 2: Emotions derail objectivity

Dealing with it: Counter subjective claims with fact. Brand names are emotional lightning rods, and for good reason. People who have invested their time and talents in building a brand are often disheartened at seeing it fade away.

Here’s where quant-based research is so valuable. It can measure the actual equity a brand name carries, identify the specific attributes that name represents to customers, and predict how the market will likely react to its changing.

M&A Naming Chart

Nearly every acquisition target will make a case for keeping its name, so be prepared to back up your position with solid facts. Objective data carries more weight than personal associations and anecdotal evidence.

Trouble spot no. 3: The transition gets stalled

Dealing with it: Create a detailed timeline in advance, and follow through to see that it’s implemented.

Based on your research findings—how much equity exists and where it sits—set an end date for when the acquisition will be fully integrated into the master brand, and then map backward from it. You’ll need to determine name architectures (i.e., the structure of the name), decide on key transition moments, identify all touchpoints affected by the name changes, and assign a team or individual to oversee each one. Then plot the whole process on a calendar to understand the timeframe for each step in the transition.

Depending on equity, areas of competence, and brand credibility, a name transition could take place nearly overnight, or stretch out to several years. But in the end, rolling your acquisitions into your master brand is your best bet for simplifying brand architecture and protecting brand strength, even as you build out functionality and reach new audiences.

 

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