Grow or Die: Benefits and Considerations of Growth Strategies Through M&A

We’ve done the math, and it’s simple: growth creates profits. And profits, well, they create an improved ability to withstand challenges. Organizations face any number of daily challenges – expected and unexpected – making profitable growth essential to survival. But, it can be much more than that. Growth is the lifeline of an organization and digs deeper than expanding operations, boosting team morale or entering new markets.

When analyzing how to profitably grow your business, here are some benefits of incorporating M&A into your growth strategy:

Mitigating Financial Risk

If you’re a business leader, you know very well that as your business scales, the financial opportunities for you and your team scale as well. However, financial risk also increases just as proportionally, if not more so. As you grow, you have revenue, profit, account management, contracts…all of which have tangible financial value. Not to mention the number of people (and their families) that rely on the success of the business. If the business fails or is in a downturn, there is simply more to lose.

Growth through M&A often allows founders and business owners to “take some chips off the table” and rest easier with the financial risks they face personally.

Enhancing Competitive Position

Having trouble engaging potential new clients? Interested in providing more value for your current customers? If we look at the data, combined entities post-M&A have a larger client base than they did pre-M&A. This increases the opportunities to cross-sell products and services. With a larger customer base, organizations can better weather tough times and increase their competitive advantage significantly. M&A also can enhance access to larger sales and marketing teams that have the potential to become more consistent and focused to aid in this advancement.

New Opportunities for the Team

If you consider your employees family, consider M&A growth. Being acquired or merging with another company allows your business to be part of a larger organization and often provides additional opportunities for your team to learn and grow. Allowing your employees to explore enhanced responsibilities can increase overall job satisfaction and, as a result, better business outcomes.

Since our transaction advisory services team lives and breathes M&A, here are a few considerations to keep in mind when it comes to growth through M&A.

Know Your Options

There’s another phrase we like to use when it comes to M&A growth strategies, and that is sell when you don’t have to. Whether that be a full sale of the business to a strategic buyer or private equity group, or a partial sale to family members or management, do your research to determine what path is best for your business. In fact, early conversations can save major dollars as a seller.

Align Your Vision with Your Selected Partner

As a business owner, it’s critical to choose a partner that truly understands your vision and will help achieve it faster and better than you could by yourself. We know; easier said than done. If the transaction lacks alignment, owners risk their vision getting diluted, or worse, destroyed.

Buckle Up for the Ride

M&A is both an art and a science, so much so we’ve considered calling ourselves ‘transaction artists.’ Should we consider ‘transaction scientists,’ too? Jokes aside, it takes a lot of time and effort from both sides for a transaction to be successful, and there are often roadblocks along the way. Setting realistic timelines, involving the proper teams and establishing effective communication channels will make the journey less bumpy.

Growth can mean different things for different organizations, but we know one thing is for sure: grow or die.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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