Mergers and acquisitions are nothing new to the business world. In fact, more than 12,713 mergers and acquisitions occurred during the year of 2019 within the United States. This kind of business pivot is common sense for so many platforms and operations out there, which is why we rarely pause to ponder the true potential of an acquisition. Seen as more of an “out” or an escape from a current market, an acquisition can actually be one of the most sustained forces of growth within a company today.
Experts all agree that growth in any company can occur from one of two ways: organic growth or via acquisition. Critics will say that acquisition is a sign of a weak company exploiting another platform in an effort to keep their brand alive. However, if one pauses for only a moment to consider the greatest acquisitions of our time, from Facebook acquiring WhatsApp and Instagram, to TikTok acquiring Musical.ly, they will realize that the biggest tech conglomerates in the world only got that way by acquiring their next closest competitors.
Acquisitions are a more efficient and effective way to achieve your desired targets without investing time and resources into natural, organic expansion. Of course, anything worth having takes work, which is why leveraging acquisitions as your growth strategy means you need to lay the groundwork and do your due diligence. There needs to be an obvious strategic fit between your company and the one you are acquiring, as well as clear organizational structuring that all parties have agreed to.
5 Reasons Why Acquisitions Will Grow Your Company
When the right work is put into the acquisition, this kind of strategic business move can aid your company in the following ways:
- Trim Down the Redundancies: While you sit down with stakeholders, you get a chance to have an organizational “do-over.” By getting rid of the processes that were not working, this can increase your profit margins by removing all of the inefficiencies you had been avoiding. Just look at the example of Adidas in 2006 when they acquired Reebok in a $ 3.1 billion USD deal. This acquisition helped Adidas broach the American market and become a major competitor with Nike.
- Acquire New Talent and Perspectives: Acquiring a smaller, more agile startup or business can present opportunities to leverage new talent, culture, and perspectives. By welcoming in new people with new ideas, thoughts, and mindsets, this can challenge your current workforce to start thinking outside the box, which can lead to some of the best moments of innovation for your company.
- Obtain New Specialized Skills: By targeting a specific company to acquire, you can hone in on hyper-specific skills and expertise that you want to add to your growing empire. This can include industry knowledge, sales pipelines, and even patented technology. It’s a shortcut to acquiring something as valuable as a multi-million-dollar app without going through the time and resources to build it on your own. That’s why the cost of an acquisition is marginal in comparison to the advantage and long-term growth it brings.
- Better Customer Service: At the end of the day, whether you have a B2C or a B2B operation, you need to ensure your customer and partners are happy with what you are providing them. By acquiring another team of workers, you can culminate your talent and time into fine-tuning customer service. This means you can offer even more availability to the clients that keep your operation afloat.
- Advantage Over Your Competition: The clock is always ticking in the world of business, which means if you choose to remain stagnant and uninterested, your competitor is going to eventually snatch up that specialized startup. Just look at internet juggernaut Google. Their Google Ventures has acquired over 300 companies to date, including HubSpot and Uber. They wouldn’t be where they are today without this kind of appetite for risk. Acquisitions help you play the game.
It’s time to dispel the notion that acquisitions are second-place growth choices for companies today. If you want to be the best of the best, then you need the very best working for you. The only way to do that is to join forces with the other trailblazers out there. Two heads are better than one, which is why acquisitions are your keys to the future.