Although mergers and acquisitions can certainly function as a growth strategy in the business sphere, they come with certain caveats – and you must prepare for the fallout in case they fail. As the business marketplace experiences fast alterations with the changing of the guard (the Baby Boomers nearing retirement age), this may be just the thing your company needs if it is currently suffering from stifled growth.

Conditions Under Which a Merger/Acquisition Should Be Attempted

There are quite a few reasons under a merger or acquisition can work as a growth strategy: for example, they can work wonders in acquiring a new service vertical or product line, help pivot into a related market, or better establish yourself as an industry leader in a service-dominated marketplace. Some of the ways in which they accomplish this are:

Mergers and acquisitions can shore up missing knowledge in a crisis situation, such as a tech company acquiring a disaster recovery firm during a spate of hacking attempts targeting companies in that subsector.

Somewhat similar to the above, mergers and acquisitions can also be great for adding intellectual property without risking a lawsuit; the talent responsible becomes a part of your team. The current tech marketplace has change dramatically from the tight-fisted arenas of the past; today, intellectual property is being sold readily, and the right IP can propel a company to the lion’s share of industry sales.

Mergers and acquisitions are also huge time-savers, in that they can dramatically shorten learning curves. Even if you have th research and development resources to manufacture something, simply buying an already-established proof of product can save you time – which equals money.

When Mergers and Acquisitions Fail

Sometimes, these endeavors fail – and it is usually due to a clash of company culture. This can be parried with the right legwork beforehand; such as clarity in your expectations and a plan to implement new measures.

Another potential problem is confusion about what the company actually offers now, post-merger. Educating the consumer is actually one of the more costly company expenses; especially since it is a competitive marketplace and there are always other options. This ties into yet another problem, which is a decrease in the strength of your brand. There are ways to parry the above, such as understanding the link between visibility and reputation; these are things to think about before you can successfully employ mergers and acquisitions to your benefit.

Contact Progressive Capital Funding today to learn more about financing solutions for business mergers and acquisitions.