A company’s brand portfolio serves as its link to customers and markets, protects it from competitors, and provides it with a degree of channel power. Historically, brand portfolios were built, brand by brand. But in today’s fast-paced and highly competitive marketplace, companies cannot afford to rely solely on brands built from scratch. Consumer preferences change, yesterday’s star brands are today’s dogs, new segments emerge, and established competitors and nimble start-ups are quick to spot and respond to new opportunities. A brand portfolio that does not continually evolve to meet the changing strategic needs of the market risks becoming obsolete. At the same time, building brands has never been more costly, nor more fraught with risk. In response to these challenges, firms are increasingly choosing to acquire brands from other companies. Acquisitions of brands allow firms to respond far more quickly to the needs of an emerging market segment or to a competitive move. Furthermore, buying an established brand is considerably less risky than undertaking the launch of an entirely new brand. But acquiring brands presents its own set of challenges. Not only must the purchased brand have the potential to fulfill the strategic objectives for which it is purchased, but it must also be integrated into the existing portfolio of brands and brand management structures of the acquiring company, and be properly deployed to capture market opportunities. Strategic match, portfolio fit, and effective deployment can mean the difference between success and failure of a brand acquisition. Yet managers tend to underestimate the effort and risk associated with brand acquisition. Brand acquisitions may have a lower rate of failure than new products, but they are not risk- free. We develop a framework to guide managers in assessing potential acquisitions against key success factors. To develop the framework, we have assembled and examined a comprehensive set of brand acquisitions in the food and health and beauty sectors that took place over the past 25 years. We studied key variables that helped us understand how and why brands change hands, as well as the financial consequences of acquisitions that were ultimately deemed to be either successes or failures. We supplement the statistical results with in-depth case studies of brand acquisitions that help illustrate the key lessons.
