HOW PRIVATE EQUITY FIRMS INCREASE RETURNS BY BEING BRAND-DRIVEN

How Apple Proves Brand Equity Multiplies Revenue

Apple dominates the smartphone market, driving on average 50-60% of the category’s revenues on just 19.7% of total units sold. The next largest share of revenue was Samsung at 15.7% on 19.1% of total units shipped.¹ The moral of this little financial comparison? Apple can sell a commodity product with arguably the same functionality and performance for 3X more than Samsung can charge solely because of the strength of the equity in its brand and its relationship with customers. Apple’s customers pay more and buy more. They are more loyal, provide greater lifetime value, protect against market volatility, and live for product extensions. Simply, brand-driven companies realize superior financial returns — an incontrovertible fact that holds for all companies, B2B or B2B, regardless of size.

A Focus On Branding

For private equity and venture capital, a focus on brand positioning and development has historically taken a back seat to the standard financial and operational metrics that measure performance and asset value. It’s a long-standing battle because brand was regarded as an intangible asset and is not easily measured in real time. Accounting methods for applying brand equity to the P&L are woefully inadequate in quantifying the benefits and increased value derived from a strong brand. But things are changing. Many investment firms are embracing the power of building brand to accelerate value creation, improve asset performance, and increase negotiating leverage to generate outsized returns. Being brand-driven has become an operating best practice; the third leg in the value creation stool.

Take Bullish in Brooklyn, NY, as a great example. Bullish is an agency and a venture capital firm combined. They understand the role of brand in value creation. Their brand‑centric philosophy is rooted in the idea that enduring value comes from building culturally resonant, emotionally sticky consumer brands. Their early bets on Warby Parker, Peloton, and Casper illustrate this approach. Warby Parker reshaped eyewear through design‑forward DTC storytelling and omnichannel expansion. Peloton built a subscription‑driven fitness ecosystem where community and product experience reinforce each other. And Casper transformed mattresses into a lifestyle brand through disruptive simplicity and sleep‑focused positioning. Bullish’s success comes from backing companies where building brand is not an afterthought; it is the business model, the growth engine, and the moat. Warby Parker now operates 352 stores. The Peloton brand survived the pandemic and now generates about $2.5B in revenue. Casper went public in 2020 at a valuation of $1.1B.

Being Brand-Driven: A Core Strategic Pillar for Value Creation

Being brand-driven is a conscious choice, a philosophical approach to building value. Adding a focus on brand equity and goodwill has become a core strategic pillar helping build value for shareholders. These firms know the greatest benefit comes from being brand-driven from the outset, not later in the game. They know that strong, well-positioned brands drive market dominance, invigorate underperforming assets, or help companies pivot and respond to market changes or competitive threats. And that extending and aligning brand positioning across all constituents, internally and externally, has remarkable power to accelerate growth. For these firms, maintaining and nurturing brand is a necessary and responsible cost of doing business, not a discretionary spend.

8 Brand Truths That Guide Top Private Equity Firms:

1. A portfolio company’s brand is a principal asset, one to be managed, nurtured, developed, and, importantly, leveraged.
2. Focusing on building brand equity from the beginning is the way to maximize a holding’s potential return on investment. Building equity takes time and consistency.
3. From the beginning, brands should be positioned and aligned with investment goals and the optimal exit path.
4. Strong branding builds sustainable competitive advantage that can survive time, competitive attacks, and market fluctuations. A strong brand drives preference and loyalty and signals higher future potential. It is a multiple modifier.
5. Brand equity, goodwill, and leverage at the negotiating table are all inextricably interconnected. It changes investment outcomes.
6. The powerful effects of a strong brand on the consumer are equally effective on the potential acquirer. Acquirers always gravitate to, and pay more for, leading brands- companies with a strong, well-articulated, and imbued brand with a clear promise of future potential — this is goodwill.
7. The same brand focus, analysis, and rigor are required for any thorough due diligence process for acquisition or merger.
8. The strongest way to mitigate risk and protect investments is to build and maintain brand strength and differentiation in the market.

Brand-Driven Companies Generate Outsized Returns

For brand-driven companies and private equity firms, branding is never an afterthought. It is at the core of how they approach building value. Building brand equity is leverage and a multiple modifier. They know branding is a process that marinates best over time and demands great consistency; that it is part science and part art. They see their portfolio companies holistically, from the brand to the numbers, everything aligned, employees and the marketplace walking in lockstep and building both the tangible and the magically intangible side of brand. Looking to generate more growth, larger returns, and long-term value? Be brand-driven.

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