Acquisition Strategy
At certain stages in the life cycle of a successful businesses, a pro-active growth strategy is required.
Management must decide whether it is more efficient to invest in organic growth, or to undertake an acquisition programme. Mercer & Hole are well placed to advise on these issues, having made several acquisitions ourselves over the last few years.
The starting point should always be internal. An analysis should be made of the suitability of your business for substantial growth – are you sufficiently resourced to make acquisitions from a funding, management and systems perspective? What are your goals – access to new markets or synergies/economies of scale?
It also crucial to consider the state of the business sector and the wider economy. Can funds be raised? Is the sector growing/contracting? What economic/political/cultural policies will have an affect?
There are several compelling reasons for private companies to expand by acquisition:
- An acquisition can provide quick access to new markets, products, technology and skilled staff.
- Acquired businesses should generate a new customer base ideal for the cross selling of existing products and services.
- An acquisition could reduce your exposure (for example if you buy into your supply chain).
- Ongoing, an acquisition can improve the profitability of the combined business by reducing total overheads through synergy savings.
Overall, the value of a business can be increased by the acquisition of assets at a favourable price.
