May 9, 2014

The acquisition strategy for well-known brands must include brand management

Acquisition strategy. Merger talks. Takeover rumors. I’ll admit it. I’m an M&A news junkie. What interests me most is the implementation side of the acquisition strategy, especially when it involves well-known brands with strong customer loyalty.

It’s fascinating to see how the acquiring company handles brand management decisions related to the transaction. After all, the acquisition strategy and the brand strategy are linked. And the strategies are more complicated than simply deciding whether the acquiring company will leave the acquired brand as is, remove the brand from the marketplace, or integrate the brand within its brand architecture.

Think about the uproar when Twinkies, Ding Dongs and Ho Hos disappeared from store shelves a few years ago. Hostess filed for bankruptcy and shut down operations in 2012, and private equity firms Apollo Global Management and C. Dean Metropoulous & Co. stepped in and bought the brands for $410 million. As part of their acquisition strategy, the new owners brought Hostess back to life, and the consumer website for Hostess says: “You asked for it America. And now, the greatest snacks the world has ever known are making their way back on shelves.”

In a 2013 article in the Chicago Tribune, Hostess President Rich Seban said, “We want to capitalize on the nostalgia of the brand, but we also want to make sure we’re relevant to this generation and not just the generations of the past.” That’s a great example of an acquisition strategy that connects brand management to corporate goals.

When an acquisition strategy is product driven, like the Hostess example or when a company buys a competitor’s product brand, the acquiring company needs to limit confusion in the consumer’s mind. For products with loyal customers and high brand equity, the acquiring company should keep the brand name intact or incorporate the product brand into their brand architecture.

To sum it up, when a corporation’s strategy includes acquisitions, the acquisition strategy must have brand management at the top of the to-do list. Top brands understand that brand equity can be lost if the acquisition process is mishandled. Regardless of the industry, keeping popular brands in front of customers is one part of a corporate acquisition strategy that never changes.

Hey, who took my Twinkies?