Most professional services firms that want to grow eventually run into at least one of three obstacles:
- No name recognition in new markets
- Established competition that is hard to overcome
- An insufficient pool of qualified job candidates, especially those with specialized skills
There is one strategy, however, that many growth-oriented firms use to beat the odds: acquisitions. In fact, more than 46% of high-growth firms engaged in a merger or acquisition in 2024.
Acquiring a firm offers a number of advantages:
- Instant access to a new market
- A built-in, often loyal customer base
- A new, dependable revenue stream
- An expanded team, often with hard-to-find specialized expertise
- Access to new IP, processes or technology
But adding a business—or in many cases, multiple acquired businesses—generates a series of branding questions. Do you fold the acquired firm into your own brand? Or do you keep it separate? If you fold it in, how quickly should you do it? If you keep it separate, how much of a connection, if any, should you make to the acquiring firm?
Brand Architecture 3 Ways
At Hinge, we think of these questions as problems of brand architecture. As soon as you consider an acquisition, you have to make a choice: do you want to be a unified brand, a house of brands or a branded house?
Unified Brand
A unified brand is simply a company that has no specifically identified parts. The firm has one name, and that name covers everything the business does. Think of a regional accounting firm that acquires a smaller business in a new market then changes its name to that of the parent firm.
Advantages: A unified keeps your brand nice and simple. There is no extraneous noise, no extra explaining required and no room for confusion. It’s easy to see that the parent firm has grown in size, and it can talk about its wider geographic reach. If the acquired firm has new specialized expertise, the firm can now say it offers new services, works in new markets or solves a wider range of challenges.
Drawbacks: Your buyers may not see everything you do. It can also be a disadvantage when you compete against highly specialized firms and you are perceived as a generalist.
House of Brands
A house of brands is a company that operates under multiple brand names. Each brand appears to be an independent operation—whether or not it is in fact independent or has its own P&L. For instance, an engineering firm might buy up a constellation of niche specialty firms, allowing them to retain their original names.
Advantages: Each brand retains its brand equity—loyal clients see few if any visible changes, and they are less likely to worry that the firm they trust is about to lose what made it special. The acquiring firm doesn’t have to invest a lot of money building brand awareness in a new market. And if the acquired firm is a specialist, it retains all the advantages of focused expertise.
Drawbacks: Maintaining and promoting multiple brands can get complicated and expensive. Also, it is more difficult to build a consistent experience and culture when each component firm has independence baked into its identity.
Branded House
A branded house is a combination of both. All acquired firms inherit the name and logo of the parent firm, but each is additionally identified by some relevant feature, usually their area of expertise though occasionally some other qualifier, such as location. For example, a consulting firm might acquire a variety of different businesses, rename them to match the parent firm, then append a functional (or business unit) identifier to each, such as Strategy, Management Consulting and Executive Coaching.
Advantages: All of the unified brand advantages (see above) apply. In addition, a branded house can market each of its business units as if they were small, specialized firms. Meanwhile, any business unit in the firm can tap a diverse range of in-house expertise when needed.
Drawbacks: It can be difficult for a business unit to distinguish itself from the overall firm. Specialized competitors can still have a perceived advantage, even against focused business units. In addition, marketing multiple business units can be challenging and expensive, though it can be easier than promoting a house of brands. On the other hand, working with a larger, more resource-rich firm may appeal to some prospects.
More Things to Consider
Once you have made your choice, you may have to make additional decisions. For instance, if you are pursuing a house of brands strategy, do you try to tie your brands together in some way? Or do they remain intact and more or less autonomous?
There are three common ways to visually connect brands that don’t change their names. All involve modifying an acquired firm’s logo.
- Do nothing to the logo except to append a descriptor to each, such as “A [parent firm’s name] Company”.
- Retain the firm’s identifying logomark and colors, but standardize the typeface to match that of the parent firm. This way, if the portfolio firms’ logos were shown together, they would appear to be loosely related. At the same time, each identity retains the characteristics their clients are most familiar with.
- Modify the logo, including mark, type and colors, to create a coherent visual branding system. This process may or may not involve modifying the parent firm’s logo, as well.
In the branded house approach you will need to consider how you will break out business units. It is not always as simple as assigning an acquired firm a business unit designation. More often than not, purchased businesses share at least some services with the parent organization. In this case, it might make sense to designate virtual business units that aren’t associated with a specific set of offices. Those services can—in theory, at least—be offered by any office, even if the specialized expertise resides in a particular location.
In our experience with firms and private equity investors, the world of M&A is rarely simple and straightforward. Some acquired firms resist changing their names. CEOs sometimes have very different visions, complicating a unification. And some acquired firms are easier to integrate into the parent brand than others, with certain “straggling” acquisitions retaining their independence and brands for a number of years.
Acquisitions can be a powerful strategy that delivers more visibility and more revenue quickly. While this strategy is not for everyone, if you go into the process with an open mind and realistic expectations—and a plan to bring order to your collection of brands—acquisitions can solve a number of difficult business problems while delivering exceptional growth.
