October 31, 2013
We’ve worked with a number of clients as they have navigated through mergers and acquisitions. Typically, the due diligence process focuses heavily on financial considerations and is led by the company’s financial advisors and legal counsel. But what about the brand equity of the acquisition target? Brand-related intangibles are often overlooked or downplayed as part of the M&A process, and the marketing function often has very little input into the evaluation process.
If your company’s growth strategy includes M&A, are you assessing the acquisition target’s brand as part of your due diligence process? Here are a few things to consider:
1) Brand Equity Research
What value does the potential acquisition target realize for its corporate or product brands compared with a competitor or generic equivalent? You should review any brand equity research the potential target has conducted in the past five years. This is particularly important if your corporate philosophy is to have a “master brand” at the top of your brand hierarchy (as opposed to many stand-alone entities or product brands), since it’s likely you’ll be folding those brands under yours.
2) Customer Satisfaction Indicators
How do the potential acquisition target’s customers feel about the company? Are they loyal to its corporate or product brands? Consider reviewing customer satisfaction survey results, or customer recognition of the acquiree’s corporate brand against its product brands – and how that data stacks up against the competitive landscape.
3) Marketing Function
Review information related to the acquisition target’s marketing staff, outputs and budgets. How does the marketing ROI of the acquisition target compare with your own?
These are just a few metrics you may wish to use to help evaluate the strategic fit of an acquisition target from a brand and marketing perspective. Having gone through this process with clients, our checklists often include upwards of 30 questions to help assess whether the brand equity and marketing function of a potential acquiree will be a benefit – or a detriment – to the overall transaction.
Do you have a process to assess brand attributes as part of your M&A routine?