Three Reasons Why Investing in Your Brand Pays Off During M&A

There’s been no shortage of M&A activity in the crane, rigging, and heavy-equipment sector over the last couple of years.

As in other industries, like the industrial manufacturing and automotive sector, there’s a real trend towards consolidation that’s impossible to ignore.

You might view this trend as positive, since it could lead to more stability in volatile markets, or you might view it as negative, since it could lead to reduced competition in the market.

But no matter where you land on the issue, there’s at least one thing we can all agree on: having a strong brand makes you a more attractive target to potential acquirers—and having a strong brand is never a bad thing.

Over the last couple of years, here at Thrive, we’ve seen an increase in the number of PE-owned companies coming to us for brand architecture and/or brand transformation work.

These organizations all understand, at least on a fundamental level, that having a strong brand can translate into real, quantifiable dollars in the form of higher valuations at the time of sale.

With that in mind, here are three ways that having a strong brand can positively impact your organization during the acquisition process.

A strong brand commands a premium valuation

While there are certainly a lot of factors that affect a company’s valuation at the time of acquisition, having a dialed-in brand is a powerful one that smart companies understand and invest in.

A strong brand contributes to an enhanced valuation of a company, and brands that are well-perceived in the market often command a premium during the negotiation process, reflecting the intangible assets and goodwill they bring to the table.

Often, a strong brand also indicates a loyal customer base, instant recognition in the marketplace, and a higher-than-average share of market.

So, while it’s true that having a strong brand may not be the ultimate deciding factor in a deal, having a weak or confusing brand likely will.

Better brands lead to higher valuations.

It’s that simple.

A strong brand commands premium market positioning

The longer we do this work as an agency, the more I believe in the power of positioning.

We typically talk about two types of positioning—brand positioning and market positioning.

Brand positioning focuses on shaping the audience’s perceptions and emotions towards the brand, while market positioning focuses on defining the company’s place within the competitive landscape and targeting specific market segments with differentiated offerings.

A business’s brand positioning helps achieve its market positioning.

Put another way, investing in your brand is a means of carving out your place in the market.

In turn, holding a premium position in the market is extremely meaningful during the acquisition process.

Strong brands—and strong brand strategies—are key for lots of reasons. Strong brands often cultivate a sense of exclusivity around their products or services.

This isn’t necessarily about being inaccessible; rather, it’s about creating a perception that owning or using the brand’s products and services is a mark of distinction.

Customers are often willing to pay a premium for brands that they perceive to offer higher value.

And acquirers are often willing to pay a premium for the exact same thing.

A strong brand signals reduced risk for the acquirer

Every acquisition—and every marketing strategy for that matter—brings with it a not-insignificant amount of risk. This risk is distributed across both the acquirer and the acquired, but the risk is greater for the acquiring party.

While that risk can never be entirely eliminated, brands that are deeply trusted in the market can significantly reduce the perceived risks associated with an acquisition.

This brand trust, which is built over time through consistent delivery of quality and reliability, as well as continued brand investment, can reassure acquirers about the stability of the customer base and the predictability of future earnings.

A strong brand acts as a form of risk mitigation, making the investment seem safer and potentially leading to a smoother due-diligence process.

Strong brands build trust, and trust reduces perceived risk.

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For companies in the crane, rigging, and heavy equipment-sector that considering M&A as part of your growth or exit strategy, investing in building and maintaining a strong brand is a strategic imperative.

Not only will it improve your operational and financial performance, but it will significantly enhance your attractiveness as a potential acquisition target, thereby unlocking greater value for shareholders and stakeholders alike.