A brand refresh
is worth celebrating
12 STEPS TO AVOID A DISASTER
A successful brand refresh is worth celebrating. Among many other positive outcomes, when done correctly a revitalized brand will create awareness, preference and loyalty. In turn, these factors will help grow revenue, maximize profits and lower costs. This explains why Private Equity firms leverage brand refreshes so often. PE firms look for opportunities for value creation, and they know that branding can unlock substantial incremental value for their portfolio companies. However, it’s also common knowledge that pulling off this type of initiative can be difficult and risky. In this article we’ve outlined the 12 most important steps that help minimize the risk of negative consequences while optimizing the chances of success.
The process to acquire a portfolio company is extremely complex
The list of the key activities that PE firms undertake to acquire a new portfolio company is long and complex. To start, PE firms will conduct a critical evaluation of the market conditions, the target company’s financials, and synergies with other M&A targets, in order to determine current valuation and the potential opportunity for value creation. As part of the due diligence process, PE firms will engage with key stakeholders and carefully study the target company’s operations, including auditing their legal, financial and ops documents. Additionally, they will evaluate the best funding structure, which may involve raising debt or equity capital. Another important element is integration, which can involve restructuring divisions or departments – all in an effort to lower costs, eliminate redundancies, accelerate growth, and increase profitability. Lastly, private equity firms will also invest time evaluating the most effective exit strategy with the goal to generate the best return on their investment as fast as possible. This may involve selling the company to another buyer, taking it public, or conducting a management buyout.
Obviously, PE firms consider many factors when deciding to acquire a new portfolio company – besides all of the activities listed previously, one other item that is often considered is whether a revitalized brand could drive up the valuation.
A brand refresh can certainly create value,
but not without a solid plan
Due to the complexity of M&A transactions branding does not always get the attention it deserves, and that can be dangerous because a rebrand that is not planned or executed well can create more harm than good.
Here’s where we can help. We have managed a substantial amount of brand refresh as well as comprehensive rebrand programs, and in the process we have learned how to do it in a way that optimizes the chance of success. We understand the business objectives that drive PE firms, and we have the experience and the resources to deliver this type of work more efficiently and more effectively than most. Our expertise, skills and innovative approach can help accelerate the process, minimize the risks, and maximize the ROI associated with branding programs.
We're very proud of how the McAfee rebrand
helped create value for the company
Back in 2010, McAfee, the cybersecurity pioneer, was acquired by Intel for $7.7 billion. Shortly after, the company changed its name to Intel Security, essentially turning McAfee into an Intel business unit. Unfortunately this brand strategy did not resonate with McAfee’s customers, and in 2016 Intel sold the company to the private equity firm TPG in a deal worth $4.2 billion.
Shortly after that transaction, Solid Branding was hired to manage a comprehensive rebrand, including a return to the McAfee name. We delivered a new positioning and messaging strategy, and a complete redesign of the brand identity along with all the marketing assets and campaigns needed for launch. Fast forward to 2021: McAfee was acquired by The Investor Group for over $14 billion, representing a premium of approximately 22.6% above McAfee’s closing share price of $21.21 at the time of closing. Of course, branding is not the only factor impacting the valuation, however it is clear that rebrands can substantially influence financial value, which is why PE firms consider it a business strategy for value acceleration.
We delivered a new positioning and messaging strategy, and a complete redesign of the brand identity along with all the marketing assets and campaigns needed for launch. Fast forward to 2021: McAfee was acquired by The Investor Group for over $14 billion, representing a premium of approximately 22.6% above McAfee’s closing share price of $21.21 at the time of closing. Of course, branding is not the only factor impacting the valuation, however it is clear that rebrands can substantially influence financial value, which is why PE firms consider it a business strategy for value acceleration.
Here are the 12 most important steps
for a successful brand revitalization program
Although this is not the ultimate list of activities, we recommend that any company embarking on a rebrand consider these 12 steps to optimize the success of their brand revitalization initiative.