Mergers and acquisitions. It's a phrase that most will only read in a financial newspaper. When we hear about mergers and acquisitions we typically think of companies like AT&T, Time Warner or Gannett newspapers. For years, merging with another company, acquiring another company or being acquired have been strategic growth strategies for corporate America. However, small and medium businesses have used merger and acquisition strategies for some time now, especially over the last year or so. In this article we will discuss some of the advantages of merging with another company or even acquiring somebody that will help in your sales efforts. For the remainder of the article we will refer to Mergers & Acquisitions as M&A’s.
There are many reasons why a small or medium business would look to get acquired, acquire another company or merge with someone else. It could be that the organization wants to get involved in a different vertical market or territory. It could be that sales have suffered during a difficult time, such as during the Covid outbreak, and want to combine sales with another company. It could be that the organization wants to expand on their offerings and a merger or acquisition can help them do that. Maybe you want to gain a competitive edge or acquire new technologies or develop your team’s skills. We have even seen that some organizations have suffered because of a labor shortage and by joining another company they can share that resource.
From a sales perspective, M&A’s can make sense for some organizations. But, before you jump right in, consider some of the risks associated with the idea. Assuming you are looking to merge or get acquired, as example, you will be exposing yourself to financial scrutiny and potential judgement on your well-being as a company. You could be risking that the marketplace or your customer base finds out your intentions, potentially losing faith in your deliverables. Nonetheless, the current market could warrant an M&A consideration for some companies.
Using the example of having plenty of business but struggling with the labor force to do the work, an M&A could potentially solve that for you. Sharing this resource with another similar company could help with this burden. As well, sometimes, instead of the profits of company A and the profits of company B adding up to the profits of two companies, “one plus one can equal three”. In other words, the synergy and labor sharing can actually make both companies more profitable. Another bonus for the owner is the ability to work less “in” the company and more time working “on” it. With the shared resources, companies now have time to build the organization through strategic planning, implementing customer growth strategies and work further on their sales and operational systems. As example, we have a client whose goal is to spend less time at his business, as meeting with his customers is what he truly enjoys doing. By merging with another company, he was able to allow the new partner to run the operations side of the business while he strictly runs sales and is now rarely in the office.
We have several clients that have successfully merged or acquired other companies, allowing them to grow into new markets. As example, a landscaper could acquire an irrigation company which would allow for additional income as well as new customers and relationships. It could be a tree care company or fertilizer company they acquire, that now brings new customers who they currently do not work with. In this case, it might even open up larger opportunities with organizations that will only do business with a full service operation. Maybe that same landscaper wants to expand his territory but doesn’t have an office or personnel in that area. Other examples we’ve seen are the roofer that acquires or merges with a company that provides siding. It could be a window and door company that acquires or merges with a home security company. You get the idea. M&A’s can be a very strategic move for an organization that can have monumental results.
If you’re considering a merger or acquisition my first advice is to seek out professionals that can help walk you through the process. It is critically important for a successful M&A process that you consider hiring an M&A specialist, such as a law firm or investment banking firm. They can help with things like tax, matters with employees, compensation and benefits, employee matters, data security, real estate and intellectual property.
Mergers & acquisitions are not for everyone. However, we are now in a different world. What you may never have considered even a year ago perhaps is now on the table. Different times could call for different strategies. It is critical to understand why you want to merge, be acquired or acquire another organization. Like sales, you may want to ask yourself questions like, who will prosper the most from the deal? What are you willing to sacrifice or willing to let go of? What is the end-goal that you seek and how much certainty do you have that this strategy will get you there? Look at the person or persons that you will be approaching. Do they have a similar culture as your own? Do they share the same philosophical business ideas? What will be the advantages and disadvantages? Ask other trusted advisors that you have. Do they agree or disagree?
This article of just under 1000 words is meant to simply get you to think differently and expose you to the idea of M&A’s as a potential sales strategy. If you want more resources on the subject, there are literally hundreds if not thousands of articles available on this topic. Good luck with your research and future success with this strategy.