Acquisition is one way many companies have been able to grow their business. Yahoo! is a perfect example of a company that constantly reaches out to new markets with this method. They’ve acquired blogging platform Tumblr, photo storage website Flickr, and video ad company Brightroll.
It is important to keep in mind though that the success of an acquisition depends on its terms, whether or not it is a good culture fit, and the scope of the acquired company’s audience. No matter what strategies you decide to implement for your own acquisitions, make sure they’re right for your company.
Now, let’s talk about some acquisition-based growth strategies you can get started with. They are called horizontal, backward, and forward strategies.
Horizontal: Acquire Competing Businesses
Buying competing businesses can help your company and help you gain more leverage in your market’s playing field. Furthermore, whenever companies acquire key competitors, they also acquire their staff and therefore more firepower for innovative productive development. While you will have less competition to go against, you will also have more manpower to move forward.
Backward: Acquire One of Your Suppliers
Want better command of your supply chain? Acquire one of your suppliers. This strategy may allow you to speed up and get a better hold of your product development process. Not to mention, it may make it cheaper for you because you can pick up the margin that your supplier was charging you. This strategy may help you to attract more clients as they might be able to get products at a more efficient rate.
Forward: Acquire Companies That Belong to Your Distribution Chain
Another way to capture additional margin with less risk is to acquire one of your product’s distributors. This strategy also enables you to better control how your product is sold.
Remember, running a business successfully does not need to be complicated. Keep it simple!
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Manny Skevofilax is a consultant and speaker that assists his clients with successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny helps businesses to enhance their financial results by using his experience in strategic planning, financial statement analysis, operations, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at firstname.lastname@example.org.