Reasons to Use an Acquisition Strategy To Grow Your Business
As a small business owner, you may be considering ways to grow your business. You can grow organically, gradually increasing your production, staff, and sales, or you can acquire companies with the same, substitute, or similar products. You may also acquire companies with different products if you want to enter into another industry or market. Although both strategies rely on significant investment, these are reasons you may consider growth through mergers and acquisitions.
Fill Your Product and Service Gaps
Does your product or service have a critical gap, and have you found another company that fills that gap? Rather than spending significant amounts of money on new technology, additional hiring, new training, or manufacturing equipment, you may find it less expensive to acquire a company that has already established ways to fill your gap. Once your product or service is complete, you can focus on expanding your market share and establishing a more secure supply chain through better vendor relationships.
Acquire Talented Professionals
One way to gain key talent is through acquisitions. Employee acquisition is challenging, but it is more so for key employees with specialized skills or experience. In addition, many industries are experiencing staffing labor shortages. Therefore, you could be waiting years for great employees with the knowledge you need. Specialized industries, such as engineering or cybersecurity, find targeted hiring especially challenging. You can bypass the searching and hiring process by acquiring or merging with a company that has these individuals on staff.
Expand Your Market Share
Yes, acquiring another company allows you to expand your market share. Your competitor may have a larger or similar percentage of the market, but when you merge, you gain the company’s customers. As long as you continue to provide exceptional products and services, you can keep these customers without additional marketing expenses.
Acquire Valuable Assets
Buying new machinery, real estate, and intellectual property, such as patents, trademarks, and software, is expensive. Key employees are also considered intellectual property by some business strategists. Acquiring a company with the intellectual property you need can have added benefits. You don’t have to spend the time and money developing or purchasing these assets alone, and you have access to the employees who know how everything works and can do what you need.
Mergers and acquisitions are strategies that can help you expand your business. Purchasing an established company, especially one you currently compete against, can reduce your risk while allowing you to gain the assets you need. At Charis Commercial Capital, we provide funding strategies for business mergers and acquisitions. Contact ustoday to learn more.