Business acquisitions are well-known for propelling forward a company’s growth and expanding its customer base. However, to complete an acquisition successfully, you need to have a strategy in place that will benefit your company. While there is no magic formula to guarantee success every time, this guide will walk you through some of the basic acquisition strategies so you can find one that suits your goals.
1. Sales Growth Strategy
This is the most obvious type of acquisition strategy and is where a business undertakes an acquisition to boost organic growth at a rate faster than it could do as a single entity. You want to boost your sales dramatically.
2. Regional Growth Strategy
If you are looking to expand your business into new countries, acquisitions can streamline the process. By acquiring smaller businesses in your country of interest, the groundwork and basic infrastructure are already there for your to build upon.
3. Diversification Strategy
For any business owner looking to expand their target market and diversify the type of consumer they appeal to, you may be interested in a diversification strategy. This will help you expand out of your niche and find other sources of revenue through offering more and thus appealing to more customers.
4. Vertical Integration
Most businesses sit at some point in their supply chain and rarely have control over the entire thing. However, vertical integration strategies involve acquiring the companies supplying or distributing your products so that you can oversee all areas of production.
5. Industry Roll-Up
Sometimes small companies can struggle to complete with the businesses leading the market. An industry roll-up is where several smaller businesses combine to form one larger entity, combining their share of the market and becoming a formidable company.
6. Synergy Strategy
Acquisitions also take place with the goal of boosting efficiency, which is known as a synergy acquisition strategy. By two companies combining, revenue costs could be slashed, meaning both companies will become more profitable by joining together as a sole force.
7. Low-Cost Strategy
An effective way to take over the market is by offering your products at a lower price than any of your competitors, yet to make any substantial profits you need to be selling in large quantities. If you are a low-cost company, acquiring a business that already has a large market share can see your sales figures and profits increase.
8. Market Window
You may have a new idea that you see a gap or a “window” for in the market. However, if you don’t have the expertise or resources to see your new idea take off, you may wish to target a company that is further ahead and can bring your idea to life so that you both benefit.