The supposed dual brand policy is commonly made use of today in framework of the post-acquisition assimilation procedure. This technique means that after the conclusion of the transaction, the obtained business continues to be in the marketplace with its initial brand name and independent industrial structure.
Although from the customer perspective this method looks straightforward sufficient, the truth is somewhat a lot more complicated, and the variety of reasons for its application is rather large, and varies considerably from one instance to one more.
Listed below adheres to a short recap of factors, with which I had a possibility to come across in the M&A tasks in the field of commercial automation and power distribution tools.
Size and complexity of the assimilation procedure
Perhaps one of the most evident of all the elements. The combination of a huge enterprise, with a credibility in the market and with its strong service culture– is an intricate process, and the Purchaser requires time to recognize just how not to break a well-functioning mechanism. If all is limited to this factor, the independent brand name is preserved just for the duration of the integration process
Picture and society of an expert
Right here we are talking about getting a company concentrated on a narrow technological location, where the market is controlled by so called professionals with technologically advanced sales force. For instances suppliers of sensing units, accuracy drives, and so on.
Without keeping an independent brand and commercial group, the assimilation of such a producer right into a “generalist” company, with a large brochure of products and “polyvalent” sales pressure, can result in the loss of the image, business performance and eventually of market shares.
In principle, besides the brand name and the commercial group, it might additionally have to do with protecting a special R&D team with a terrific possible for technology.
Photo of a market leader
This holds true when the acquired business is the globally leader or at least has more powerful settings than the Customer for the targeted product portfolio. The purpose of the transaction for the Customer is to come to be a leader for a specific product.
The 2 -brand plan can be utilized as a short-lived tool, together with an advertising campaign to ensure that the Buyer is finally perceived as a leader in this area as well.
Positioning in different prices segments
For example, the purchaser has already good positions in the costs section– high end items offering ideal in course capabilities. Then the company determines to diversify its tasks and go into the medium– products with best rate/ features proportion. For that reason, it recognizes and acquires one of the principals of the medium sector.
Thanks to the double brand name plan, it is possible to have a clear brand splitting up, independent prices and finally to maintain sales and profitability of the both brands.
Image of a local manufacture
A global company plans to enhance its placement in a certain nation and determines to buy a leader of the regional market. Taking into account the cultural, legal, political context of the targeted country it is very important to protect the picture of the residential manufacturer. As an example, to stay a Japanese in Japan, Russian in Russia and so on. This can be performed with the assistance of 2 -brand plan.
Human variable
This can be simply an arrangement between the former owner of the company and the leading management of the Customer to keep the acquired company “as if nothing had actually occurred” for couple of coming years.
Ultimately, I wish to mention that regardless of all its benefits, the dual brand name plan has also a downside as it requires specific costs, restraints, and sometimes reduce in business performance. Therefore, the assimilation group, prior to applying this plan, ought to be really clear on all pros and cons.