Is Acquisition Your Dream Exit Strategy?

You may not be looking to be acquired now. But is an acquisition pay-off in your long-range plans? This is the dream exit strategy for many small and medium-sized businesses. The question is how do you prepare and when should you start? If an acquisition is a goal then you can never start too early. Even if you are looking 5, 10 years, or longer down the road. Brand is a long-term investment and it takes time to build brand equity and value.

Don’t Wait

Many companies make the mistake of waiting until they’re ready to market their acquisition availability. It’s like shopping for a loan. The best time to seek out a loan is when you don’t need it. The same is true for shopping your brand as an acquisition target. There is a lot you can do and should do well in advance of an acquisition. Preparing a brand for acquisition takes time and investment beyond the more pragmatic dimensions of the business. According to the US Chamber of Commerce:

If an acquisition deal is part of your business exit strategy, there’s a lot more preparation work than just running your numbers and compiling personnel files.

6 Ways to Pre-Plan For Brand Acquisition

1. Know Your Buyer

it may be difficult to project who your potential buyer might be. You don’t necessarily need to know a specific company. But you can probably define the characteristics of what your buyer would be attracted to. Of course, financial performance will be essential. But could you also fill a niche they don’t serve? Expand their current audience? Extend geographic reach? Help with competitive differentiation? Add brand value? Any and all of these could be important considerations with a potential buyer. Understanding how you can be a more attractive option will help in your own brand growth development strategy earlier rather than later.

2. Have a Brand Plan

Every company has a business plan. And a marketing plan. Few companies have a brand plan. Why is that important? Because brand is an essential ingredient to market performance. Having a plan demonstrates that you have a strategy for building and protecting your brand. If you have multiple products and services a thought-out brand architecture will show that you have considered how your portfolio is organized. It needs to make sense for your customers to navigate. A plan will also show how you are investing in the brand. And the resources allocated to grow it. Buyers are looking for brands, not just companies.

3. Don’t Underestimate Brand Culture

Cultural fit and compatibility can make or break an acquisition. Values, behavior, and attitudes have to mesh. But culture is something that you can’t dictate or mandate overnight. Culture has to evolve naturally to be authentic. It all starts with the values, vision, and mission that everyone can buy into. Those not only have to be defined early but they have to be communicated. Everyone needs to understand what the brand is and believe in it in order to live it. Education, training, and leadership will pave the way. Culture may not seem so important as financial performance. But a culture disconnect can stall the deal.

4. Protect Brand Assets

Brand is considered one of the most important assets of any organization. A potential buyer will be more interested in an acquisition that has ensured that their brand assets have been secured. Have names and key identity elements been trademarked and registered? Are there standards in place to ensure brand consistency across touchpoints? Has intellectual capital been secured and protected? Is there a brand management structure that has overseen brand execution? All of these and more constitute how the brand is seen, perceived, and valued in the marketplace. A potential buyer wants to know that you have managed your brand as well as your business.

5. Demonstrate Brand Performance

Brand performance goes hand-in-hand with financial performance. Every company will have historical evidence of its financial health, revenue, and profitability. How many companies have historical evidence of brand performance? Not many. And it is not the same as financial performance. But first, you have to know what it is that measures brand performance. Is it brand recognition? Awareness? Resonance? Relevance? Distinction? Or something else? Also, you have to have a way to benchmark and measure performance. Most likely that is market research and surveys. Knowing how your brand is performing allows you to make intelligent decisions with your marketing strategy and spend. And having a historical record of brand performance will impress any potential buyer.

6. Estimate Brand Value

Brand value is equal to the perceived value of the brand over and above the tangible assets of the company or organization. Of course, perceived value is not easy to calculate. And it’s not your perception of the brand’s value, it’s your customers. Even the most sophisticated formulas that large corporations use are far from perfect. But because it’s not easy doesn’t mean you shouldn’t take your best shot.

A simple way to think about brand value is to estimate what the company is worth based on financial, operational, and other considerations if it was not branded at all. In other words if the offer was a generic commodity. Then think about what the brand contributes to in attracting customers and keeping them loyal. And, importantly, what’s the premium they are willing to pay over competitors like products and services.? That premium is essentially the value that the brand contributes. This is why competing on price is not a sustainable brand position.

Start Now and Plan Ahead

If a big acquisition payday is in your future don’t wait to prepare for it. Start now even if it is years away. And if an acquisition doesn’t pan out the effort won’t be wasted. It’s a good practice that will help guide the growth of your brand anyway. Preparing for an acquisition when you’re not ready is the best way to be ready when the time comes.

The goal of How Brand Works is to share our experience, perspectives and philosophy on the different facets of branding intended to enable an effective brand management strategy.