Business Growth Consulting: The Importance of Mergers and Acquisitions

Mergers and acquisitions are a key part of a corporate growth strategy. However, during tough economic times, many companies are reluctant to pursue other entities. Yet this is the time when the best investments are made. Just like individual investors tend to buy stocks when they are high, many acquisitions occur during boom economic times when a company is likely overvalued. The Connell Curtis Groups’ business growth consulting can help your company weigh the benefits of a merger or an acquisition with the goal of meeting your strategic objectives.

Mergers and acquisitions are often lumped together in literature and used interchangeably.  However, there are some basic differences between the two. When a one company buys another company—the target—and thereby acquires the assets of the target company, it is referred to as an acquisition. On the other hand, a merger is when two companies combine to create an entirely new company made from the parts of the two.  An acquisition is the more common of the two. But as noted, the terms are often used synonymously, and ‘merger’ may be more palatable to the customer or acquired company.

When considering whether one of the two options would be an appropriate growth strategy for your company, it is important to consider both the opportunities and the potential pitfalls. Below are five notable benefits and five potential challenges:

Benefits:

1. Increase market share

2. Enhance product offerings and/or diversify product line

3. Vertical integration of supply chain

4. Gain access to patents, R&D or technology

5. Potential tax benefits and shareholder value enhancement

Pitfalls:

1. Buying overvalued company

2. Clash of corporate cultures

3. Loss of talent

4. Failure of the acquiring company to understand the business they are buying

5. Loss of brand recognition

Recognizing both the opportunities and potential issues of mergers and acquisitions will help you develop the corporate growth strategy that is right for you. Given a sluggish economy, now may be the best time for you to consider the benefits of a merger or acquisition. With help from a business growth consulting like Connell Curtis you can develop successful corporate growth plan that meet your strategic objectives.

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