This is the top of a sweet potato plant that's been chopped off and put in water. It’s started sprouting and those sprouts are called slips. When they get a bit bigger (and it gets a bit warmer) you plant the slips in the dirt and each one usually grows anywhere from 3-6 gigantic sweet potatoes. It’s magic!

Any other gardeners getting fired up for the spring?

I think it was back in 2021. I’m sitting at my desk, inbox starts blowing up. HubSpot had just acquired The Hustle and Trends (for what would turn out to be $27m). Everyone’s pumped—it’s reply all central—except for me. I loved The Hustle, the team, the brand, the tone of voice, the videos, the podcasts. I loved it all because it was so different from HubSpot’s team and brand and tone and content. And that’s why I wasn’t excited.

I knew it was going to fall on my team to figure out how to make them fit into the HubSpot brand without losing who they were in the process.

Figuring this out and implementing it would end up taking a few (strategic) years and the cost associated is something I call The Acquisition Tax.

The Acquisition Tax

What is The Acquisition Tax?

The Acquisition Tax is, in my opinion, the biggest mistake companies make when making an acquisition which is not considering the implications of the new Brand on the existing Brand and therefore also not setting aside money to bring them together. The longer they wait to think about this, the bigger the tax bill gets!

To be clear, this isn’t about the purchase price of the new property or the product integration or the onboarding of the new team. Those things are usually considered from the start (as they should be). But the fourth item on that list needs to be Brand.

WTF do we do with the new Brand?

This is the big question and one I’d recommend looping your Head of Brand (or Head of Marketing) in on as early as possible. I’m not going to sit here and tell you not to do your due diligence and not buy a company because the Brands don’t align—that’d be absurd. But the ask is that you think about what happens once the acquisition closes because slapping your logo and colors on it alone won’t help.

Why not? Because I’m assuming you bought this new Brand for a reason. One of which is their customer base and/or audience. The worst possible thing you can do is scare those people off by taking something beloved of theirs and burning it to the ground (even if that is the long term plan). So how do we lower the tax bill? You need to ask yourself a few questions:

1. Are we keeping the new Brand?

It might be an acqui-hire. It might be a good product with a bad Brand. It might be a long-term play that you need to hold onto but not want to invest in for now.

These are all very real possibilities and before you go down a long rabbit hole you need to make a decision. One of my favorite projects ever led to the acquisition of Motion.ai. That acquisition was made solely to build the tech into the platform. The brand wasn’t going to live on and everyone was ok with that. All that meant was that in the long-term we needed to update some copy and move on.

The Motion.ai homepage

Again, if that’s the case you’re fine. Nail down your deprecation plan and move on, but if the property is going to live on, get ready.

2. Where does the new Brand fit into the old one?

I don’t want to go too far down the Brand hierarchy path here (this is a decent article about it) and if it’s a merger that’s a whole different can of worms but you likely have a parent brand already and if the decision hasn’t been made already (maybe you’ve acquired other companies before) you now need to figure out if you want to:

1. Roll the new brand into the parent brand (this means you’re not actually keeping the brand after all)

2. Build a corporate brand structure where every subsidiary or business function has the parent logo and branding. This is a branded house where the new brand can still live on in name but it’ll still look like the parent brand. See FedEx below

3. Let the brands have some personality of their own but still have a clear hierarchy. This is Virgin below.

4. You can let each Brand do it’s own thing completely but live on as a subsidiary. See P&G below.

Borrowed from the Branded Agency

For most B2B orgs you’re living in 1 and 2, maybe 3, and 4 is an absolute pipe dream.

3. What is the timeline?

You know how you go to the store to buy something? You hand the cashier money and you leave with the item, transaction over. That’s not how acquisitions work which is part of why these things tend to get announced in advance, you know, “Company X has agreed to purchase Company Y with the deal expected to close in Q2 of next year”

There are contracts to consider, previously made obligations, there are customer retention concerns, there may even be regulatory concerns. You can’t just flip the switch on these things. It takes time, so you need to figure out what the big picture timeline is.

Once you understand the timeline of the sale then you need to build out a brief for the brand work. You also need to realize that it’s likely a multi-phase approach.

The Motion.ai Brand was going to be deprecated but we still needed to give their customers an opportunity to become aware of what was happening and decide what to do next for their businesses. That meant:

1. We had to update the homepage to inform customers of the acquisition

2. We had to include the HubSpot logo alongside theirs

3. We had to take their website down completely

For The Hustle, one of the biggest goals was to keep the audience so we needed a multi-phase approach there too but it was different:

1. We changed nothing about their branding but added a sprocket next to their logo—nothing else, not even the company name

2. Then we started exploring what a hybrid version of the brand would look like and over the course of a year integrated pieces of the core HubSpot brand into The Hustle Brand

3. Once their customers were more comfortable we did a bigger rebranding exercise to bring everything fully in-line visually

This took two years to do and easing the customers in was a major factor. It also pushed us into thinking about our Brand hierarchy and the decision was made to build an Endorsed Brand which was really important because a Branded House would’ve killed all the personality The Hustle crew brought with them.

4. What about the website?

I’ve been talking about that a lot (and I am a dev, I guess) so let’s cover that next. All of a sudden you’ve got a whole new web property to manage.

Where is their website hosted? Beyond the technical implications, that monthly payment now comes out of your budget. Nobody thought about that, trust me.

How was their site built? Is it using the same languages and frameworks that your team uses? If not, you may need to hire help to cover the gap.

Will you be migrating the website? If it’s a handful of pages, it’s not a big deal, but what if it’s a newsletter with hundreds of web pages? Now you’re in trouble and need to make sure you have a migration plan.

How about that branding? You’re going to want to migrate no matter what because managing two CMS’s is unnecessary but are you migrating things as they are or are you rebuilding the entire website to match new branding?

This is one of the biggest reasons the acquisition tax balloons.

5. What about Brand systems?

You knew I was going to get here eventually. Your Brand systems are critical for scaling. I’m hoping you’d been building out your Canva and your DAM and your video software and your CMS. Now you’ve got to fit the new stuff in there.

Even if you’re fully integrating their Brand into yours, they’re likely using some different styles that maybe you want to keep and they’re definitely using different web modules which need to be added to your CMS and design system. You’re welcoming a bunch of new people to your team, they’re already generally uncertain about what’s happening. Please make their lives easy and give them the tools they need to be successful.

6. So what do you do?

The thing that we haven’t discussed up until this point is the fact that your team had an entire workload up planned. Now we’re adding a giant Brand project with no people or money set aside to do it.

Make this a priority

Bandwidth won’t just appear so this project needs to be made a priority which means others need to be deprioritized. This is a tough conversation that needs to be had with leadership because if nothing is deprioritized the tax goes up even more because you’re outsourcing a ton of work.

Assign a pod

I’m actually shocked I haven’t written a newsletter about this yet. I will in the next few weeks I think. The best work gets done in pods. At a high level it’s creating a dedicated, cross-functional working group to take on the project. You should have people from different teams working together to create the best output.

And when I say cross-functional I don’t just mean Creative teams. Bring someone from the acquired company in, bring in your content team, bring in the product team if it makes sense. This isn’t meant to be a huge team (the two pizza rule is perfect here) but you should have voices from different areas that can provide valuable feedback.

Build a DACI

Big cross-functional project? You better set up a DACI to make roles, responsibilities, and decision making extremely clear. Every extra meeting, every extra round of feedback, every extra everything is going to raise the tax so you want to make these decisions ahead of time.

Assess the different types of work and determine how it gets done

Of course every project is going to be different depending on the size, parent brand, your brand hierarchy, and the answers to the questions above but at a high-level—if you can make this the priority and have the internal team and skills—this is how I think about the work and who should do it:

You can see how easily this can all add up, right? Which is why you need to be thinking about this just as much as how the new company fits into your product or your company culture. At this point in my career, I think I’ve worked on 10 different acquisitions of varying sizes and while there is no one size fits all solution, the more prepared you are, the less you’ll pay in The Acquisition Tax.

In the next few weeks I’ll be announcing something new. It’s an agency that I’m starting with a great friend and one of the best designers I’ve ever met. I’m gonna write up the why when “it’s public” but I can promise you that it’s not gonna be your standard Brand agency. We’re pairing world class design with world class systems thinking to build out full Brand Systems for our clients—your brand strategy, your visual identity, your Figma design system, a fully built out Canva instance, a modular CMS, an organized DAM, and all of the enablement materials you’ll need to get to work.

Too many agencies email you a PDF and call it a day. We want you to be able to use your new Brand on day one. If you’re ready to take your Brand to the next level, hit me up. We’re open for business!