Center for Simplified Strategic Planning

Co-Branding Tips are Helpful for Acquisition Strategies

By CSSP, Inc.

At the conclusion of a recent Q&A article in BusinessWeek, David Clanachan (chief operations officer of Tim Hortons) and Dan Beem (president of Cold Stone Creamery) provided some advice concerning their ongoing co-branding effort. The two convenience food companies have co-branded nearly 50 restaurant locations in the U.S. and Canada and are optimistic about the future success of the cooperative effort. Highlights from their advice on co-branding prove to be equally useful for any business considering an acquisition.

1. Look for brands that complement each other.

For most acquisitions, this advice is perfectly obvious, but it is occasionally ignored even by business savvy companies. As part of a successful strategic planning process, the management team may have determined that it can achieve growth in its core businesses or in a new business segment through an acquisition. In these situations, it is possible, after several false starts with candidate companies, to become so obsessed with doing almost any deal that the original guidelines for what constitutes the right acquisition are set aside.

One thing: Often it is better to reassess your growth targets to get yourself on a more realistic track. Acquisitions for growth sake can be dangerous.

2. Ask yourself if it [co-branding] will enhance the customer experience rather than detract from it.

Whether you are involved in a consumer products/services business or whether your company operates exclusively in a B2B environment, you should always consider any major business move from the perspective of your customer. For the Tim Hortons/Cold Stone combination, the morning and lunchtime focus of Hortons' coffee and baked goods business was a good fit with the afternoon and evening orientation of Cold Stone's ice cream indulgent snack business - improving the perception of both brands in the minds their respective customers. The common emphasis of both brands on freshness (Hortons' 20-minute freshness guarantee on their coffee combined with Cold Stone's ice cream made on the premises) worked together rather than created conflict in the eyes of their respective core customers.

3. Ensure the management teams are compatible and like-minded.

Anyone who has lived through an acquisition knows the importance of management team compatibility. Whether you are talking about a joint venture/collaborative marketing arrangement or an acquistion, the same cautions should apply. After the deal is done (in any form), a tremendous amount of effort is required to effectively combine the two companies. Regardless of the determination on the part of both management teams to make the deal work, the process is complicated, resource-taxing and, in most cases, personal. The cultural compatibility of the teams can be the critical factor in a smooth transition of ownership. Take whatever steps are necessary before inking the deal to assess whether this part of the process will be a boon or a boat anchor for moving forward.

4. Start small…Research, test, analyze. Repeat. Then test and analyze again. And again.

Like many acquisitions, some business experiments require a single, bold maneuver (i.e., closing the deal and getting on with the integration of the two businesses). If the acquisition process is a friendly one, then it is usually wise for the two companies to find some way to work together first to determine whether the marriage should happen at all. Testing out the concept of the combined companies can provide remarkable "acquisition insurance" against making a bad decision. According to Clanachan's and Beem's advice, this may require several iterations of engagement in order to find the true basis for joining the two ventures.

5. Clearly define your organization's objectives and communicate them in advance to your co-branding partner.

This is the most important piece of advice for any co-branding effort, any acquisition or any other major business move. Especially for the small to mid-sized privately owned enterprise, which typically has more discretionary freedom in its business decisions, it is critical that the reasons for the acquisition are clearly and quantifiably understood by all members of the management team. It is too easy to simply proceed with an acquisition because it looks good at the level of superficial analysis and it "just feels right" to the small business entrepreneur. Clear identification of the strategic motivation and expected tactical outcomes of the deal will help you know in the year following the acquisition whether you made the right move. This will pay huge dividends by establishing the template for successful future acquisitions.

You can reach the Center for Simplified Strategic Planning, Inc. at

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