The right acquisition can dramatically accelerate your company’s growth. Sadly, great opportunities are widely missed, especially in the mid-market. Many companies shy away because the whole field of M&A seems too intimidating. There are others who attempt acquisitions and are disappointed by the outcome, often because they try to follow a rote system overly focused on the numbers. What’s missing is an approach that is tightly disciplined on the one hand, and sufficiently holistic on the other.
When I say “holistic” I mean you have to go beyond the numbers. The finances are an essential dimension of the M&A picture. But they are only one dimension. For success in this field, you must open your eyes to many other potential benefits.
A good acquisition might bring you a technology that you couldn’t otherwise obtain. It could bring you to a market sector that has been out of reach. It might win you exceptionally talented people. It could subtly but significantly enhance your brand and reputation, making you more attractive to customers and high-value employees. Or your acquisition could be simply defensive, blocking a competitor from obtaining the same assets.
All these and more benefits will certainly show up on the bottom line, sooner or later. However, they represent values that may not be subject to instant financial calculation.
Often the single most important benefit of a judicious acquisition can be to “recalibrate” your business. What I mean is that every healthy business has to redefine itself over and over again to flourish in a changing world. Acquisitions – and divestitures – can be a swift and powerful way to positively reinvent your company to meet new pressures and leverage new opportunities.