Advancing your operations doesn’t always require expanding your operations overseas. Many a time, strategic alliances with other organisations can work wonders for both. Mergers and acquisitions are all about finding such alliances that can fuel up growth in a sustainable manner. Most organisations rely on M&A support to expand into new markets, diversify operations, or leverage new technologies. The aim is to benefit from the synergy of operations and diversification. Let’s take a look at some relevant scenarios where mergers & acquisitions can work wonders for your business.
- Acquiring talent and intellectual property rights
Human resources are the most important resources for the majority of the organisation. There are numerous domains, including cybersecurity, accounting, etc. that are facing a shortage of experienced professionals. Finding the right talent to get the job done is challenging. Therefore, an M&A deal gives the perfect opportunity to leverage the best talent in the industry. Besides acquiring talent, it also helps to obtain esteemed intellectual property rights that adds a different dimension to business activities altogether. It gives business exclusivity and reduces competition, which directly contributes to growth in revenue and profits.
- Bank on synergies
When two organisations strategically enter an M&A deal, they have a lot to benefit from in terms of synergies. Two of the most common synergies that are evident in the case of M&As include cost synergies and revenue synergies. Cost synergies help organisations to reduce their overall cost of operations. After the consolidation of two entities into one, overlapping operations and resources are effectively optimized to benefit the newly formed entity. The combined finances also allow businesses to get a good bargain, which further reduces the cost. Revenue synergies are realised from the increased production capacity and reduction in competition, which also boosts the toplines.
- Forming a new business model
Many big businesses aim to acquire different companies in different domains to test the profitability of a new business model. Companies can have different business models that allow them to generate revenue from their operations. Hiring a firm that is already using the desired business model is a smart way to get into a new business. It can help you minimize the mistakes and learn from their experience.
- Shortens the learning curves
If you don’t want to spend a lot of time learning about a specific business or industry in general, mergers & acquisitions can be a great way to venture into a new space. Partnering for strategic growth can save you a lot of time and money. Even large-scale businesses can benefit from these deals as it reduces the learning curves and saves resources that would have been spent otherwise. Always remember that time is of the essence in a business and what’s relevant today might not be relevant tomorrow.
In a nutshell
Can M&A support fuel up your growth strategy? Yes, it can to a great extent. However, it is also contingent on how well you leverage the resources at your disposal and the company that you are planning to merge with or acquire.