Buy & Build and Brand: why brand really matters

Many entrepreneurs that we partner with at Sovereign are understandably very proud of the brands they have created, but do they truly add value?

The answer is that it depends.

A true brand is not merely the logo, a firm’s product or a collection of its visual graphics. Nor is it relevant or even valuable just because a company says it is. A brand is what a firm’s clients (and its employees) say it is! It is their expectations, relationships and experience. It’s inextricably linked to a firm’s culture. It’s a gut feeling.

So how is this feeling generated? Well, it’s the sum of all interactions across various channels, from customer service and a company’s website, to product or service experience and tone of voice. Each interaction is an opportunity to enhance or damage the brand. And the stakes are high – brands can take years to develop and just moments to destroy.

A successful brand will often deliver value and emotional engagement at every point of interaction. If this is achieved, then clearly a brand does have value. Larger businesses can quantify and capture this value on their balance sheet. Whilst smaller businesses are generally less sophisticated in formally recording this value, at Sovereign we absolutely recognise the value that a strong brand brings to a business.

Take Arachas, the Irish commercial lines insurance broker we invested in. Their highly successful acquisition strategy was enabled by their strong brand persuading vendors that Arachas would be a great home for the businesses they created. Another good example is Murgitroyd, our IP services investment, which has spent more than 10 years building a recognisable North American brand, and it is now reaping the benefits with regular and significant client wins including some of the West Coast tech-giants.

Sometimes, however, the resultant scale and repositioning of an asset via a significant buy and build strategy warrants a brand change to truly reflect the ‘new’ organisation. We have supported several companies we partnered with in implementing this brand change strategy. Outcomes First Group and Agena, for example, both created new brands to reflect the fact they had become much larger organisations with greatly enhanced capabilities.

We have seen how a strong brand enhances value, and this is a key focus for us when we partner with management teams to create exceptional businesses. And if you’d like to know why Sovereign’s own brand is a penguin, get in touch!