What to consider while acquiring a new brand
Sometimes companies acquire new brands to complement their existing brand portfolio. The new brand can give them access to a new product line, a new channel, or a new region. It can help the company speed up its entry into a new market. Such acquisitions can be great enablers for growth if they are executed right. Unfortunately, it is more often to see failures than successes. Here are a few things to consider.
There are two main expectations in brand acquisitions. The first one is about growing the newly acquired brand. New brands are often challenged to build their administrative layers, such as information systems, human resources, financial teams. These tend to be internal-facing functions. If the acquisition can provide mature processes, reliable systems, and experienced resources to the new brand, it can focus on its growth. On the other side of the acquisition, the company may be interested to learn something new from the acquisition. For example, the new brand may be better in a different product line or have a loyal following in a new channel or region, etc. Carrying this learning from the new brand to the rest can put the company ahead of its competition.
Unfortunately, people get lost in these promises without paying too much attention to how all this would work. The answer is in the details. You need to look deep into the foundation to ensure success. In the end, the core value proposition is process alignment between the two entities. New processes must be exchanged and existing processes must be leveraged. This is much easier said than done. Because processes run on systems. Unless you establish a single platform, this process exchange and standardization cannot happen. For example, you cannot expect a single account payable department to process vendor invoices for the new brand unless the new brand uses the same business application.
As you peel the onion, you will realize that you cannot achieve system consolidation without data consolidation. You need to establish one master data so that you can run one process across the companies. For example, you need to have a single vendor master to enable shared accounts payable. You need to start comparing vendor, customer, bank, partner lists to establish one master.
In short, process consolidation requires system consolidation which then requires data consolidation. If you start with data, then move on to systems, and then to process, you can achieve the final consolidation - which is people consolidation. This is where the rubber hits the road. You can establish one team that can run a standard process in a common platform with a single master across all your companies. This enables growth while minimizing cost. This is the holy grail of the acquisition's value proposition. If you can deliver on this data-system-process-people consolidation, you can build a brand acquisition engine and repeat the process over and over to achieve high growth with high margins.
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My name is Cem and this has been another gem.
