Mergers and acquisitions (M&A) can accelerate a company's growth probably more than most other means within its arsenal. This is particularly true of larger deals. Mergers and Acquisitions have one common goal that they are all meant to create a synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved. To effectively identify, value and integrate smaller strategic targets, companies need to:
1) Develop an M&A vision that aligns with the dynamics of their industry in the face of disruption and convergence.
2) Adapt the criteria and decision frameworks for evaluating their portfolio and acquisition targets to fully understand a deal’s impact on their portfolio - and how it will enable them to redefine their business model.
3) Accelerate their overall M&A decision making to move at the speed of the market and avoid missing out on key opportunities to acquire vital capabilities.
Mergers and Acquisitions (M&A) are a great way to grow your business without having to wait years for your marketing and sales strategy to pay off. When you need immediate growth for your business, this can be the best option for you that provides the instant result. The primary goal of a company interested in a merger or acquisition is to secure an opportunity that will either achieve the objective of growth or provide an area of expansion that will add to the product/service line in a market that is currently not served by the company. The motivation behind this pursuit is that the resulting combination of products, key people, and existing pipeline will allow the business to operate in new markets and offer new options to their existing market.
Pursuing mergers and acquisitions does not come without challenges. Combining two business results in many new issues that did not actually exist before, this includes: operating a company with a presence in multiple markets, a larger and more diverse customer base, a more complex product and services portfolio, and a high level of people and operational complexity. Another issue is the cost reduction goals can conflict with revenue growth opportunities.
The challenges of making a merger and acquisition work illustrate why deals intended specifically to enable growth fail to yield the desired growth objective. Although mergers and acquisitions can be a real path to growth, the decision to make the deal is only the first of many decisions that will affect its ability to be successful. This makes you wonder if a merger and acquisition will work for your business. Therefore, you want to understand your odds of succeeding and if the challenges are worth the effort.
The goal driving many business acquisitions involve synergies. When companies are choosing to merge together, the desire is for the whole to be greater than its individual parts. The synergies involving marketing and economies of scale are clear benefits for why a merger and acquisition should be an option for growth. Also, there are typically opportunities involving production, volume discounts in purchasing, and reduced overhead expenses.
If you are in the position to acquire a business, you may want to pursue this growth strategy. You know that the business environment presents challenging factors, such as competition and acquiring market share. Therefore, acquiring your competition and gaining their markets and customers will put your business in the position to reap significant rewards. You will find that they will start investing more when you are able to show how this acquisition will immediately pay off, instead of taking a time to produce results. This is why you should seriously consider acquiring a business if you want your business to experience growth.
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