You can use mergers and acquisitions (M&As) to expand your business offerings, gain new territories, enjoy a competitive edge, or obtain new technologies. Because of these types of benefits, M&As give businesses the handle to scale for growth.
How to Use a Mergers and Acquisition Strategy
Maybe you’re seeking a way to solve a business problem. If so, you might consider one of two types of M&As. These two types of M&As benefit you either financially or strategically. As the name suggests, you might employ a financial merger to increase your investment holdings or to receive fast cash.
Alternatively, a mergers and acquisitions strategy gives you a way to expand your business more quickly. If you’re seeking to add to your product lines, grow your facilities, participate in new market activities, acquire IP, or improve your technical skills, M&A strategies offer a solution.
A “Win-Win” Business Approach
In basic terms, a mergers and acquisition strategy represents the typical “win-win” situation in business. While that phrase may be overused, it still is applicable when it comes to M&As. The idea here is to find those companies that have notably high valuations.
Therefore, your target company in an M&A should be doing business with a client that is essential to its success. Without this factor in place, you’re losing the point of merging with and acquiring another company.
While you need the security of disciplined growth, a mergers and acquisition plan can help you realize a whole new level of success. You can push your business plans forward more quickly and improve your services and product offerings.
If you are looking to acquire another business entity, you need to be cautious at multiple levels. According to legal experts at James Berry & Associates, M and As are complicated strategies that require comprehensive insights and due-diligence. Any carelessness in this regard can lead to heft losses for the business.
The Benefits of Using an M&A Strategy
Let’s look at how M&As can reap results that increase your influence in the marketplace.
1. Improved Customer Service and Fulfillment
M&As respond to changes in the market – changes that leave voids in what you can offer customers. Therefore, an M&A transaction can give you the necessary skills and experience, plus the client’s lists, to ensure better customer service and fulfillment.
2. Access to Intellectual Property and Staff
Companies may fall short of the needed staff and resources that support success. A mergers and acquisition strategy can make all the difference in your access to and use of talent and intellectual property (IP).
Consider IP as a type of currency for your business – a way to prevail and get noticed in the marketplace.
3. Synergies that Increase Business Bottom Lines
Synergies related to M&A strategies include cost synergies and revenue synergies. According to Investopedia, a synergy represents an idea where the performance and value of two businesses, when merged, are more significant than what the businesses offer separately.
The Value of Cost Synergies
Cost synergies make it possible for businesses, when combined, to substantially cut costs while giving them more leverage to negotiate financially.
The Impact of Revenue Synergies
Revenue synergies allow businesses to sell more inventory or increase prices. In turn, companies can expand territories, access new markets, increase their base of customers, and create new sales opportunities for growth.
Position Yourself for Growth
If you seek to expand and do so dramatically, M&A strategies allow you to do so. What do you want to accomplish? If you’re seeking to increase your bottom line and resources, following an M & M&A strategy gives you the ability to change your position in the marketplace positively.
