How Do Acquisitions Impact Business Growth?

Business Growth

The common goal all businesses strive toward — regardless of age or current size — is (sustainable) growth.

There are, of course, multiple ways brands can work toward that goal. Paid advertising, attracting organic traffic, optimizing web design, investing in customer experience, or boosting R&D efforts are all excellent choices.

Nonetheless, one growth strategy is unmatched in growth potential: growing a brand through acquisitions.

Essentially, acquisitions mean purchasing the majority (or 100%) of the stocks of a target business. When done well, they can be an excellent way for brands to expand their operations, acquire talent, or enter new markets. However, as with any undertaking, buying a target business can also come with risks and uncertainties.

So, if you’re interested in acquiring a business but aren’t sure how it could impact growth, here’s everything you need to know about business acquisitions.

The Benefits of Business Acquisition

There are multiple reasons for considering business acquisition as a growth strategy.

No matter your initial inspiration for taking this step in running your business, rest assured that expanding your operations through buying businesses comes with multiple benefits.

Access New Markets

One of the best reasons to achieve business growth through business acquisitions is to do so to enter new markets.

Essentially, when you buy a company in a market where your brand doesn’t already operate, you can achieve significant growth without having to do all the legwork of establishing a brand with a new audience. It can be an excellent strategy for international expansion. Even more importantly, it can be a shortcut towards reaching your new target audience without wasting time and energy on the technical aspects of starting a company abroad.

Acquiring Valuable Talent (or Technology)

Another significant advantage of buying a well-developed small (or medium) business instead of trying to build an entirely new branch of your existing brand is that it can allow you to acquire valuable talent.

Business acquisitions to acquire talent and technology can be extremely successful. They allow you to hire the best experts in your niche without having to go through the painstaking recruitment and onboarding processes that are commonly complicated.

Moreover, talent acquisitions can be a great way to avoid high turnover rates, especially considering that approximately 20% of employees leave within the first 45 days of employment.

Another commonly overlooked benefit of talent acquisition is that it can help you expand your team with experts from anywhere in the world. This doesn’t just mean accessing their expertise. It also can be a way to build a super-efficient and highly-skilled team while being able to pay them competitively. Inevitably, that will boost job satisfaction and employee productivity.

Outperforming Competitors

Finally, remember that expanding your company could be the key to outperforming your competitors.

Whether you need to up production, make product/customer experience improvements, or need a team whose innovative solutions you can add to your roster, you can rest assured that finding the right target business could allow you to reap all these benefits.

The Risks of Business Acquisition

As you try to learn how acquisitions impact business growth, you need to be prepared for the fact that they won’t always be smooth sailing. In fact, there will be aspects of buying a business that can pose challenges even beyond the acquisition phase.

Difficulty Finding Financing Options

One of the biggest hurdles toward growing your business through acquisitions is that finding the required funds can be very challenging — especially if you don’t know where to look.

Fortunately, you can explore the different opportunities to financing your acquisition — from bootstrapping to bank loans to finding investors.

But, no matter what option you’re leaning toward, make sure you’re well acquainted with all your options and choose the one that fits your needs and matches your risk tolerance.

Branding Implications

In some cases, the biggest challenge of acquiring a business isn’t that it’s expensive. Instead, the difficulty comes from the fact that the buying process inevitably has implications for your existing brand.

So, as you prepare to purchase an existing business, be prepared for the possibility that rebranding will be necessary.

If you approach it well-prepared, it should go down smoothly. However, if you’ve made the wrong choice (especially in matching target audiences, business values, or company culture), know that you might need to make changes that could take a significant amount of time and energy and even end up losing some of your team members.

Operational Changes

Lastly, note that the acquisition process will inevitably come with some changes you and your team need to prepare for.

Whether those changes include adding several new team members, working in new (international markets), or adding new products to your existing offer, don’t underestimate the importance of preparation.

Do your best to get a complete insight into how your target business operates. Work with your team of experts to predict challenges. Try to approach the merger process with an open mind so that you can get the most out of both learning and growth opportunities.

Wrapping Up

Acquisitions can be a great way to impact business growth positively. But if you want good results, you definitely need to do the prep work. Otherwise, be ready for the risks to outweigh the benefits.

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