Parent Company Take Overs and Why Brand Consistency Matters

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Table of Contents

• Acquiring Startups
• Branding and Intellectual Property
• Licences and Assignment
• Informing your Customer Base
• Key Takeaways

Brand consistency is key in an ever expanding market full of franchises, startups and small medium enterprises. However, it is sometimes difficult to manage your brand. This is particularly true if you have multiple businesses with different or related brand identities. 

A business’ brand may sound like an abstract concept, but it is actually made up of the business’ intellectual property (IP). Broadly, IP includes intangible property such as trade marks, copyright, patents, designs, trade secrets, designs and even plant breeders’ rights. 

If you have recently acquired a new business, you should consider how you are going to keep your brand consistent by either absorbing or distinguishing from the acquired brand. 

Acquiring Startups

Large corporations often acquire small businesses or startups to expand their established brand. 

The intention behind this shift was reducing inconsistency in branding. In turn, this allowed Foodora to consolidate its customer base under one brand. This is particularly important if you are acquiring a business that is similar to your own. Whilst the two businesses may be able to coexist, in most cases, both brands’ power will be diluted. 

Branding and Intellectual Property

When Foodora rebranded Suppertime, they effectively absorbed a pre existing customer base in Australia. So, what are the important points to take away from this example? First, if you are acquiring a company or a startup, always think about consistency and consider whether you will need to rebrand the company. By doing so, you may be able to ensure that your business does not lose loyalty and brand recognition. 

Trade Marks

Registering a trade mark for your business name and logo is an important first step for any business. If you plan on expanding internationally, consider performing preliminary checks in specific countries such as the United States or China to determine if another business is already using your intended trade mark. 

Performing this sort of check first will save you from having to rebrand in future. This can be of particular concern once you have built up considerable brand recognition and customer loyalty. 

While this example was not of an acquisition, it nevertheless demonstrates the difficulty that rebranding brings. 

Licences and Assignment

Acquisition of a startup will usually involve assigning the IP to the new owner. You should be careful when drafting the assignment agreement and ensure that it includes all IP the startup previously owned. This will ensure that you have the power to control the startup’s brand, including ceasing use of the brand. 

If you intend to overhaul an acquired business’s brand in favour of your own, be aware that after a certain period of time you may become vulnerable to an application for non-use against your IP. Whilst this only refers to certain kinds of IP, such as trade marks and patents, it is still a potential risk if you are not careful.

Informing your Customer Base

You should ensure that the customer base of the acquired business is appropriately informed of the rebrand. From a commercial perspective, failing to do this will prevent you from taking full advantage of your acquisition.

Key Takeaways

Brand consistency is something you should always consider when expanding your business, particularly when you acquire a smaller business or a startup. Each acquired business comes with its own brand identity and customer base. Rebranding is an option that, when done correctly, can consolidate and absorb acquired businesses into your brand identity. As long as the new business’ existing customer base is clearly informed, your business will be able to reap the benefits of each new acquisition. If you need help with managing your business’ brand, contact LegalVision’s IP lawyers on 1300 544 755 or fill out the form on this page.