Understanding M&A Growth Strategies For Your Business

A merger or acquisition can be a powerful growth strategy for your business for several reasons. Ultimately, your objective should determine the right deal for your company—you may even have more than one objective. Most M&A deals are financially motivated, but the proper transaction can achieve several benefits.

Expand Your Capabilities

Through an M&A transaction, your company can seek to improve its offering of core competencies. It allows you to expand research and development opportunities to gain innovations. It can help you bolster your manufacturing operations or lower manufacturing costs. The reality is that it is just faster and easier to buy existing capabilities rather than try to build them from scratch. The right M&A deal can take your company's capabilities to the next level by quickly adding new talent and technologies.

Move Into New Markets

You can use a merger or acquisition strategy to expand your company's offerings to new customers in new geographical markets. Gaining new exposure in new regions can lower business and operational risks under different economic and regulatory conditions. Buyers often look for cross-border deals when their core markets become saturated, when business slows down, or if they can find regulatory or monetary benefits in another country. M&A can bolster revenue opportunities and cost synergies while scaling efficiency as company operations expand into a broader market.

Boost Your Competitive Edge

A merger can improve key business areas such as distribution and marketing by allowing your company to expand into similar markets. When your business merges with a competitor, it instantly benefits both companies from a more extensive customer base. In the case of an acquisition, the purchasing company automatically gains the selling company's network. It can be an excellent strategy if you need help to create organic growth or if your market needs to become more saturated with competition.

More Power Through Consolidation

While M&A is a great way to unite two competitors to shore up their position in the market, this type of consolidation can also increase efficiencies by cutting surplus capacity or sharing resources. Plus, joining forces can improve production and bargaining power with suppliers, coercing them into lowering their prices. Teaming up with a company with more substantial numbers can also help your business deal with weak financial performance, which can help you pay off existing debt.

Speed Up Time to Market

If you own a smaller, younger company, you may need more resources to market your product or service as quickly as you would like. Teaming up with a more established company can help you quickly bring a promising product to market because they have the experience, resources, and more significant sales force you need.

Gain New Leadership

You may be ready to exit your business for retirement or pursue new ventures, but you need someone willing and able to succeed you. In this scenario, a merger or acquisition can effectively solve your leadership problem and leave you confident about the company's future you worked so hard to build. Your business can also leverage M&A to accelerate leadership development, get faster results during transformation, and enhance your leadership pipeline.

Lower Costs

Synergy in M&A is a beneficial result of a deal that sellers and buyers anticipate. It means that the value of a newly created combined entity is greater than the value of two separate companies. Through an M&A strategy, you can cut costs and increase efficiency and output. It can be as simple as combining locations or streamlining support functions to improve economies of scale.

Simply Survive

If your business is struggling to stay afloat, an M&A strategy may be the only way that your company can survive another day. This is especially true during economic downturns. M&A can help you avoid bankruptcy if your business is in distress. But you should act quickly, as the more distressed your business is, the harder it will be to get the best deal because the value will continue dropping.

The Power of a Strategic Alliance

Mergers and acquisitions bring companies together through a total change in ownership. However, there is another way that your business can share resources for a common goal without sharing ownership. This is known as a strategic alliance. Strategic alliances enable your business to multiply in terms of its strategic advantage but with less commitment than a traditional merger or acquisition.

Let's Talk

If you may be considering a merger or acquisition strategy to grow your business, we would love to discuss how we can help. Our world-class team of experts at Benchmark International is proud of our reputation as a true game changer for accelerating business growth in the most innovative ways possible.

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com

ABOUT BENCHMARK INTERNATIONAL:

Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $11 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook’s Global League Tables.

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