How to preserve tech brand equity after an acquisition
Tech companies buy other tech companies.
Today we can expect mergers and acquisitions to only accelerate as our industry looks to consolidate.
But companies buy much more than just technology when making an acquisition.
Company and product names, visual identities, logos, brand experience, culture, trust, perception of maturity—all valuable assets that must be managed carefully in the acquisition process. And all part of the purchase price.
To retain the full value of the acquired company and its products, you need to know if, how, and when to merge brands.
We focus on the B2B tech space, especially SaaS and open source companies. So we’ve consulted on many of these transitions.
And have seen our share of them firsthand. Just follow me here:
- I spent two years early in my career at IBM.
- I left to join Red Hat when it was a 350-person company. I spent 11 years on the brand, marketing, and culture team, which had grown 10x by the time I left.
- At New Kind, we helped establish the high-level messaging and visual brand for Ansible, an automation startup.
- Two years after our work began, Red Hat acquired Ansible for $150 million.
- Last year, IBM acquired Red Hat for $34 billion.
‘Round and ‘round we go. It’s just the nature of tech.
Mergers and acquisitions create exciting opportunities. But in addition to navigating mergers of people, technology, and business models—you also need to navigate the merging of brands. Consider this scenario:
So your tech company is about to acquire a company, let’s call it “CloudCo”, and its products.
As brand manager:
- Do you sunset CloudCo and all of its product brands on day one? Full assimilation?
- Do you retain CloudCo as a sub-brand? Carving out a space for it outside the parent brand?
- Do you maintain the individual product brands, keeping them separate from your portfolio?
- Do you keep existing product names, but update the visual identity for those products to align with your parent company?
When we face these questions with clients, determining the strategy depends on three key criteria.
1. Brand equity
What is the value of the brand being acquired?
Let’s first make an assumption: You bought this company because you want to capture as much of their value as possible. Scaling the value is the goal. But preserving the value at a minimum.
For both your company and the company being acquired, consider:
- How strong is the reputation?
- How recognizable is their brand?
- Are the associations customers have positive?
- What is the strength and simplicity of the story they tell?
HOW TO DISCOVER THE ANSWERS
- Internal research
- Customer experience metrics (ex. Net Promoter Score)
- Length of time the company and products have been in market
- Size of the customer base
- Customer loyalty
- Customer level of engagement (bonus points if anyone has a tattoo)
- Internal and external stakeholder surveys
- Social media sentiment analysis
- SEO value
- What is the average organic search volume of the acquired brand’s website? Do any user behavior trends stand out?
- How many conversions (or how much revenue) does the site drive?
- What search terms does the brand rank highly for?
- Do any pages or content areas overlap between the acquiring and acquired sites? Any areas where they differ or diverge significantly?
- What resources do you have at your disposal in terms of creating sitemaps, aligning analytics platforms, performing keyword research, and setting up 301 redirects?
- External research
- Hiring a research firm can be expensive and take a lot of time. But if you need additional validation, an outside perspective can provide knowledge to support your decisions.
2. Platform unification
Is there value in having a unified technology platform and a cohesive product suite?
It’s always easier to sell one cohesive thing than several and expect a customer to put the pieces together. A whole being greater than the sum of its parts. Especially when we’re talking about technology platforms.
Sometimes when you acquire a company it makes sense to merge their products with yours. Sometimes it doesn’t. How do you know?
- Are the customers for this product different than your current flagship products?
- Does the product have value as a standalone offering?
- Does the product being acquired already have a fiercely loyal customer base?
- Would those customers be open to transferring their loyalty to the new brand?
3. Culture integration
How does the new brand change the employee experience?
Remember it’s not just products that get acquired. People come along, too.
Employees that have spent years, sometimes decades, believing in the company. Giving it the best they have. Proudly wearing their swag. The company they work for is part of their identity.
- How does the team feel about being part of the new parent company?
- Are the cultures of the two companies a natural fit?
- Is there one culture you want to preserve over another?
- How drastically will the culture of both companies need to shift to create a shared employee experience?
Staging your strategy
One important point: No matter which strategy you choose, sometimes the best answer is to make changes in stages.
Markets, employees, SEO—all need time to adjust to change. Deep and valuable meaning in a brand is often built slowly, layer after layer.
If you make sweeping changes to the brand on day one, it may feel like something has been taken away. People don’t like that.
But if you give time for the situation to evolve and people to adjust, you soften change and preserve value.
Also, if you decide to absorb one brand into another, don’t expect to purge every old example of the brand identity at once, unless you’re able to make that marketing investment. But old logos will persist. The internet is slow to forget.
Yes, it’s great to have your website and the name on your building change at the same time, but it’s usually not practical for most companies.
If you’re ready to merge brands
Brand associations are like threads that can connect two companies over time. The first connections might be simple on the surface: company and product names.
But these associations exist on many dimensions, and can be aligned in many ways: Aligning messages under common headlines. Or borrowing a color or graphic style from one brand and applying it to the other.
These changes can be subtle at first—but ultimately it’s establishing the mental connections that ultimately bring two entities with their own sets of meanings together into one.
As you start to merge brands and leave the acquired brand behind—be patient. Don’t worry about long-time loyal customers and employees who sometimes use the old name. It’s often an act of love, not resistance.
And it might not be a bad idea to chip in for the people who need new tattoos.