There is ample evidence that M&A activity can be beneficial to corporate growth. However, there is no one-size-fits-all solution that can guarantee success in this area.
Consider the following six methods for businesses to “purchase” growth through mergers and acquisitions.
- Expand: Acquiring a business in a different industry can help you diversify into ones with higher profit margins or faster growth.
- Maximize strengths: Buy businesses in the same or related industries. Then, leverage their talents to complement your own.
- Roll up: Gain a competitive edge by purchasing direct competitors to expand the company’s scale and breadth.
- Enter proximity: Scoop up companies that have similar products and capabilities to yours or that can benefit from access to your existing resources.
- Feed the machine: Acquire early-stage companies to supplement your R&D pipeline and benefit from a more established distribution network.
- Speedup Access: Combining with a complementary business can open doors to new markets.