As we continue to look at the State of Brands, one thing is very apparent, brands are evolving.  Organizations are strategizing to position themselves as market leaders and have chosen a variety of tactics to propel themselves to the forefront of the competition. As organizations are revamping their strategies to compete against tough opposition, they are also striving to offer better products, create synergies in their value chains, and become the best at what they do.  Manufacturers have become very exact on how they intend to create these changes.

Manufacturers are evolving to become more customer-centric and competitive in the market.  Simplicity brands are able to become more connected with consumers as they build trust and develop more personalized communication and relationships.  As organizational brands continue to engage in fierce competition, market leaders and competitors are beginning to take note.  Companies that have relentlessly pursued consumers are now shifting their focus to other brands and organizations and a growing trend in mergers and acquisitions is occurring.

As organizations evaluate their brands, they have started to understand who they are, who they want to become and where they are going.  Constrained to mature markets with limited organic growth opportunities, many organizations are now employing alternative approaches to aid in their goals. This has been seen most recently with the acquisition announcement of Pinnacle Foods by Hillshire that would make Hillshire one of the largest food companies in the US.  If you monitored this acquisition, you witnessed the emergence of other prospective suitors.  Both Pilgrim’s Pride and Tyson Foods offered to purchase Hillshire instead to create a poultry powerhouse or breakfast dynasty to complement their current product line.  Each combination of acquisitions would have created a unique organization with a competitive advantage and market leader potential.

We’ve also witnessed this earlier this year, as Coca-Cola entered into a joint venture with Green Mountain Coffee, expanding their product lines and tapping into the innovative solutions Green Mountain can offer.  We also saw it with previous acquisitions, Vitamin Water and Zico Beverages.  Coca-Cola is an organization that has a clear understanding of who they would like to become and want to be the best at what they do. In lieu of product development and innovation, organizations are acquiring brands that have the potential to quickly increase their current product offerings, accelerate sales and growth, align with their current value chain, and posses strong brand recognition.

This merger and acquisition trend hasn’t been constrained to consumer products manufacturers. The pending merger of Comcast and Time Warner Cable and also the AT&T/Direct TV deal illustrate how other industries are seeking to spread their reach and create synergies to enable themselves to become market leaders. As organizations and brands are merged, acquired, and divested, the business must have a clear roadmap directing the organization through this change management process.

Although mergers and acquisitions are a quick way to grow your organization and create instant wins, these decisions bring on new challenges.  Managing conflicting portfolios, sku rationalization, and integrating the two organizations requires additional strategizing and planning.  These are issues that most organizations cannot and have not planned to manage alone.  It is therefore imperative that you equip your organization with the necessary tools to hit the ground running after a merger or acquisition in order realize the gains of the agreement.

So if you’re thinking about or have recently undergone a merger or acquisition, have you identified the next set of challenges your organization, and more specifically, your brand portfolio will face?

Our upcoming blogs will provide practical advice and guidance for navigating through the inherent complexities and challenges associated with mergers and acquisitions. Read the next blog in this series, M&A Trends: Integrated Brand Portfolio Roadmap.