As fans of the hit show “Succession” know (spoiler alert if you haven’t seen recent episodes) Logan Roy, scion of the about to be sold media empire of his name, suddenly passed away. This leaves the three siblings, who have been vying for the CEO position, left without a defined succession plan - a longstanding source of conflict with their father and amongst the siblings. All the while, a deal to sell a portion of the company to billionaire acquirer and hipster tech bro Lukas Matesson is still pending. Seeing an opportunity, Matesson tries to negotiate down on the price of the deal claiming he’s the bigger brand now that the company’s leadership is undefined - and, he wants it at a discount.
As both parties seek the upper hand, there is a competition to demonstrate brand equity. Brand reputation is the difference between winning and losing - outlasting your competition or succumbing to them. In an unexpected twist, when son and heir apparent to the Roy empire Kendall Roy finds some dirt on Matesson, he flips the script and aims to squash the deal with regulation or buy out Matesson’s media conglomerate instead.
The story is unfolding while we begin what may be a long hot summer for companies looking to raise capital or be acquired. In parallel with Succession, companies with the strongest brand recognition are likely to earn the trickle of capital that’s still flowing.
Companies need to stand out in both good times and more challenging times.
Most recently, public markets over the last four quarters, combined, didn’t break $10 billion in IPO proceeds. That pales in comparison to the $35 billion raised in the fourth quarter of 2021 alone. M&A activity isn’t faring much better. Estimated deal values are coming in at barely $1 trillion for all of 2023 versus last year's over $4.5 trillion. The number of total deals are also projected to fall some 75% from last year to just over ten thousand, from more than forty thousand in 2022.
Stronger brands that earn more capital are able to withstand a drier period of funding, and we are seeing that play out as some companies get acquired and others go bust. It is unpredictable when the “window” will open again but when it does you want to be prepared and building a stronger brand will better position you to compete in such an environment.
Brand identity is also more than just the sum of its parts. Take Apple, for example, with a bevy of gadgets that span phones to desktops to watches and increasingly services from streaming to personal finance. Each product needs to be strong and have a distinctive image and yet Apple as a brand has an overarching lifestyle image.
The importance of a consistent voice, as in the fictional series “Succession” where brothers Kendall and Roman are pitted against each other over control of the flailing company theri father built, is also critical. A unified brand voice coming from the top, while at the same time allowing leaders to have unique and distinct perspectives, is a challenge many real companies face as well.
Bed, Bath, and Beyond, once a key anchor of strip malls across the United States, had to file for bankruptcy recently after trying to sell their own branded products. Turns out customers wanted good prices for known names and sales plummeted.
Not only did the business strategy destroy credibility with its key suppliers who were kicked off store shelves, but the company lost sight of its mission, brand, and message and they could not attract a bail-out. Even if a company stays true to its overarching vision, day-to-day sales and revenue matter far more than lofty statements.
With easy money all but gone, and Fed rates likely to stay higher for the time being, companies need to double down on what they do best – stick to their brand and focus on their business mission. These are the firms best positioned to thrive despite a parching summer investment drought.