GReAT™ Advice: Why do acquirers rebrand acquisitions?

The typical commercial factors contributing to why companies might want or need to rebrand include:

• Acquirer brand stronger than acquired brand: the acquirer might own a brand that will stimulate demand more effectively than the current brand.
• Acquirer brand weaker than acquired brand in an important market: particularly for partial name changes, the acquirer may want to transfer the
  awareness and strength of a sub-brand to its own brand in a target market.
• Super-divisional (e.g. regional) marketing strategy: regional advertising and publicity such as an Olympic sponsorship may make it more effective and efficient to have a single brand for many markets.
• Organisational change and integration: the acquirer wants to make sweeping changes to the acquisition – in particular to integrate teams closely – and wants to signal that to employees and other stakeholders.
• Changes to the company’s offer: showing an improved or modernised service based on the new expertise and capabilities of the acquirer to customers. This may have the added benefit of highlighting the acquirer’s other products and stimulating cross-selling.
• Saving costs: multiple acquisitions in similar industries can mean that similar products and services are sold and marketed under different brands, increasing complexity and duplicating marketing, branding and management costs. Rebrands can be effective at eliminating or at least reducing those extra costs.
• Regulatory and contractual demands: where divisions of a company are sold and the original brand is still being used in part of the original company, it may be legally necessary to change brands to avoid confusion.

However, acquisitions are often not rebranded. The reasons for this include:

• Strong acquired brand: In many cases purchasing the brand was the purpose of the deal and is essential for maintaining value of the acquisition. This is the reason why industries with strong locally focussed brands like consumer-packaged goods tend to have much lower rates of rebranding.
• Disruption: big changes to brands can indicate big changes to service or the company’s way of working which can damage customer and employee loyalty.
• Cultural Differences: strong internal loyalty for the original brand and big differences in culture between the acquiree and acquired can make execution more difficult and costly.
• Accounting Complexities: rebranding may require the write-down of the purchased brand value which will reduce first-year accounting profits despite not affecting real performance.
• Planned Divestments: the acquirer may want to sell parts of the acquisition and selling them is easier if the next acquirer does not also have to rebrand.
• Cost and complexity of change: rebranding can take a large amount of management time and thinking. Since outcomes are often uncertain, sticking with the status quo is often preferred.

Please join us in the discussion of why and how companies rebrand their acquisitions by reading the Brand Finance Global Rebrand and Architecture Tracker (GReAT™) 2020 report or by getting in touch with the Brand Finance team members responsible:
Alex Haigh, Technical Director a.haigh@brandfinance.com
Lorenzo Coruzzi, Senior Consultant l.coruzzi@brandfinance.com.

You can also watch our webinar on the same topic here.