PRIVATE EQUITY: BRAND-CENTERED TOOLS TO STRENGTHEN PORTFOLIO FIRM PERFORMANCE

Private equity firms have a significant opportunity to further enhance portfolio firms’ performance and value by leveraging well tested brand-building tools. In the private equity space, brand is commonly seen in its narrowest definition – as a company’s name and logo. However, brand is a critical corporate asset. It is inextricably linked to the business strategy, defines the organization’s promise to its customers and forms the guideline for structuring the organization’s operations in a way that supports the promise and creates a desirable, unique customer experience. Managed well, strong brands contribute to the organization in multiple ways:

  • Strengthening the existing revenue base by allowing the organization to charge a premium for its products and services and capture a greater share of wallet and by providing customer demand insulation in weaker markets
  • Facilitating the generation of additional revenue by putting the organization on the “must call” list during provider selection or swaying the decision in its favor in new business “close calls”, giving the organization permission to pursue adjacent markets and helping to enter such markets more effectively
  • Bolstering access to corporate talent by attracting and retaining the best people and fostering a unique, appealing culture

Mismanaged brands and portfolios can negatively impact earnings and profitability by tying up management resources and by driving away customers when there is a disconnect between the advertised promise and the actual experience.

There are several scenarios when private equity firms stand to benefit from working with branding experts to incorporate brand-centered optimization.

Major strategy overhaul of an underperforming portfolio company. An overhaul of the business strategy is typically mandated by changinhg market dynamics that require altering the business mix, revamping the business’ value proposition, vacating markets or entering new ones. These changes carry a risk of being misunderstood by and alienating to customers, unless the company communicates them through a compelling brand story, supported with appropriate actions across all stakeholder touchpoints. 

New product or service development and launch. Launching a new product or service can introduce a broad set of branding challenges. To accomplish the best results, organizations must define a compelling brand story that creates customer engagement and pull and identify a brand experience that will support this story across the purchase funnel. From relevant and appealing communications content across the right mix of channels, to training of sales personnel, to optimizing after-sale service and the customer feedback process – every aspect of the experience must be considered.

Merger or acquisition by a portfolio firm. Portfolio firms frequently receive private equity assistance with the goal of making acquisitions and benefitting from a greater market footprint and accomplished synergies. Mergers and acquisitions often create brand challenges, beginning with what to call the company after the transaction and going down into detail about what to do about overlapping and competing product brands. Organizations must determine which brands have equity and contribute to the bottom line and where there may be opportunities to streamline the portfolio over a period of time that minimizes risk. In many cases, a review of brand architecture and product/service naming principles is helpful in stemming brand proliferation and achieving cost savings. Research also shows three other areas requiring critical attention during integration: retaining key talent, communicating internally, and integrating cultures.

 

alex reid