Keep or absorb? What to do with all your sub-brands

The coronavirus pandemic has been harsh on the consulting industry, with our latest forecast predicting a 16% contraction in the size of the global market over 2020*. Some firms are feeling the squeeze more than others. The biggest firms, with a range of services, can pivot their expertise to meet changing client demand and have many client relationships to rely on as revenue generators. On the other hand, many small firms have neither luxury, leaving them facing a very bleak 2020 indeed.

It’s no surprise, then, to hear of larger firms talking about now being a good time to make acquisitions. Smaller firms with specific expertise can do much to enhance a bigger firm’s offering by making it feel less generic. And smaller firms benefit where their expertise isn’t “must have” on its own but may be much more compelling when integrated into a multidisciplinary approach. But once a big firm has made an acquisition, what should it do with the brand? 

There are powerful arguments for retaining the acquisition’s name. The main benefit is that it highlights expertise to the parent firm’s clients while keeping existing clients of the acquisition happy that they’re still getting the same firm they rated before. It also helps to retain the talent: Many consultants leave larger firms to work for smaller ones precisely because they want deeper specialism and not to feel like just another employee number in the system. Keeping a distinct identity in the market, then, better allows the acquisition to go on attracting the skills that made the big firm want to buy it in the first place. 

But acquire too many brands and it quickly gets confusing. When there are too many sub-brands for clients to engage with, they start to ignore them. Or they think everything is a sub-brand; and acquisitions are seen as just another department and lose their special status. Worse, it can cause perceptions of a parent brand to dilute and fragment, meaning clients lose sight of how all the different capabilities come together to deliver innovative, complex solutions. 

So the answer lies somewhere in the middle. Keep a handful of sub-brands in areas that are most powerful in broadening clients’ perceptions of what you do. If you’re a technology firm acquiring a smaller technology firm, having a parent and sub-brand that’s similar will probably just confuse clients. But if a technology firm acquires a design agency, or people and change management capabilities, or something else that obviously moves beyond its traditional boundaries, it’ll be useful to keep those sub-brands alive to distinguish your offering from rival firms. 

*To see our weekly forecast data, click here