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Diagnosing the disconnect
The missing multiple
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Pre-deal due diligence
60 % 74 % Up to
of M&A deals fail due to cultural misalignment. A stark reminder that overlooking ‘intangible’ factors carries real financial cost. (McKinsey)
Brand reveals truths that numbers can’t. While PE firms scrutinize financials, operations and tech infrastructure, they often overlook brand perception which can signal both risk and upside.
outperformance of the world market by strong well-managed brands. (McKinsey)
Savvy investors are conducting brand, culture and digital due diligence alongside financials. Why? Because these factors reveal truths that numbers can’t. They signal hidden risks or untapped upside in a target company. Brand due diligence surfaces undervalued assets, reputation and hidden execution risk before capital is deployed. It also identifies dormant equity and under-leveraged strengths that can be quickly activated post-deal. An accelerator not a roadblock Brand positioning becomes a value accelerator when integrated early as a pillar of the value creation strategy. It functions as a de-risking tool by ensuring the investment narrative aligns with market reality. Undervaluing brand can lead to paying the wrong price. For example: if a company’s customer trust has eroded due to a tarnished brand, the revenue projections will be less secure than the models predict – a risk to account for or fix.
Conversely, there might be a respected legacy name or a passionate customer community that isn’t being leveraged – a 'blue ocean' of goodwill that a new owner can capitalize on with the right strategy. Identifying underutilized brand equity can shape a stronger post-close game plan to drive growth. This insight is invaluable: it prevents nasty surprises and highlights where a strategic brand intervention could swiftly add value post-acquisition. For instance, refreshing a tired brand to re-engage customers, or clarifying the value proposition to expand into a new market segment.
You can’t just look at the numbers. If the brand has been underinvested in, or misunderstood, you’re inheriting a perception problem. That’s a value drag unless it’s addressed.
Ian Oxley, Founding Partner, Prospero Partners
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