Considering and Maximizing Your Brand Value During a Merger or Acquisition

Craig Johnson, Jeff Cunningham, Pam Henman, Sloan Carpenter

Friday, November 6th, 2020

During a merger or an acquisition, you have a lot to focus on. Amid negotiations, regulatory compliance, and personnel matters, your brand, and how its protected, is often overlooked in the process. However, making sure your intellectual property is protected and your brand is understood is vital to ensuring your overall M&A strategy is sound.

It’s important to identify opportunities to consolidate brands or, if necessary, shed identities that are redundant or potentially damaging. Additionally, you must decide whether it’s worth it to maintain multiple brands at once, and choose which brands to invest in. 

To make this decision-making process a bit easier, consider the stability of your brand architecture and the value that each brand brings to the table.

Establishing Brand Architecture

As you take stock of your new brand portfolio, put some additional focus on your brand architecture. A sturdy brand architecture removes hurdles to operational efficiency by creating a clear hierarchy of brands and eliminating redundancies.

In an acquisition, one company or brand usually gets consumed, while a merger is typically seen as a union of equals with neither side wrestling for dominance. To avoid a power struggle, you must understand your customer’s mindset and how each portfolio brand addresses their needs. It’s also important to recognize that the best M&A strategy isn’t political or territorial, it’s objective and focused on providing the best value.

If both brands are in the same industry and provide the same value to customers, they can be consolidated into a single identity. For example, T-Mobile and Sprint, both cell service providers, recently merged to be T-Mobile.

If brands are in different industries or provide different values to customers, customers may be confused and brands may suffer, so maintaining separate identities may be best. For instance, Instagram has continued to coexist with Facebook even after Facebook acquired Instagram in 2012.

Or, if the brand being acquired already enjoys significant equity, it can remain as a separate entity under new ownership. Like when Apple acquired Beats by Dr. Dre – Beats continued to use its branding even though Apple also sells the well-known AirPods. Similarly, Disney bought Marvel Entertainment in 2009. You may have not even known because Marvel has such a strong brand that continued to exist even after Disney acquired it.

By making decisions while thinking about the customer and how it interacts with your brand, you can ensure your merger or acquisition will proceed with a stable brand architecture in place.

Determining High Brand Value

With multiple brands at play, you must know the value each brings to your company and customers. Pricing premiums are the industry standard in determining brand equity or value. If your brand or product commands a higher price than a similar product in the same market, it is considered premium. A premium brand can demand loyalty no matter how crowded the landscape if it innately understands and meets its target audiences’ needs.

Before deciding on which brand to invest in and continue use of, you should ensure that the brand is available. A trademark clearance search by an intellectual property attorney can help you ascertain whether there are any roadblocks to using and registering your brand as a trademark.

Registering your brand and its logos as trademarks can also help protect your company from lookalikes and imposters, ensuring your company protects its reputation as it navigates through the M&A process.

Finding the Solution

Conducting qualitative interviews gives you an insider’s perspective of your ideal customer’s mindset and functional needs. You can firm up conclusions drawn from interviews by conducting a quantitative survey, which illuminates a strategic path forward to future growth. Research shouldn’t be limited to loyal customers or key stakeholders either.  Bring your questions to an internal audience of employees or investors for a well-rounded set of responses.

Furthermore, by performing an audit of your brand and the competition, you can see how you stack up and uncover areas of opportunistic white space that you can capitalize on. 

Though it may feel like a painstaking exercise amid more pressing matters, measuring the health of your brand portfolio and intellectual property makes plain sense when you’re involved in a merger or acquisition. An established brand architecture and clear brand value both play a pivotal role in getting the most out of your newly merged or acquired business. 

To get a sense of brand architecture and brand value while a merger or acquisition is being negotiated, add brand-specific requests to your intellectual property due diligence requests. While a traditional IP due diligence request may ask for trademarks, domain names, and hashtags, consider adding (1) social media usernames and pages; (2) brand name, brand positioning, style guidelines, and brand collateral; and (3) brand reputation in the marketplace and consumer loyalty drivers and competitive advantages.

Your new IP due diligence request list will look something like this:

List all of the following types of IP assets that you own or use:

  • Patents, patent applications, and patent-type filings such as certificates of invention;

  • Trademarks, service marks, and certification marks, both registered and unregistered;

  • Fictional name filings, such as registered “doing business as” (dba) names;

  • Internet domain names;

  • Other source identifiers, such as slogans, vanity telephone numbers, commonly used hashtags, and social media usernames and pages;

  • Software and databases;

  • Registered and material unregistered copyrights;

  • Mask works (semi-conductor chip products) registered under 17 u.s.c. § 908;

  • Registered community designs;

  • Trade secrets and proprietary know-how, technology, or processes (that is, a description of their general nature);

  • Rights of publicity, such as the right to use celebrities’ names and likenesses;

  • Brand name, brand positioning, style guidelines, brand collateral;

  • Brand reputation in the marketplace; consumer loyalty drivers and competitive advantages.