It may seem to you as an owner of an SMB (sales $5m to $100m) that acquisitions are a big boy game. Nonsense. Parking money and post acquisition integration expertise, here are the benefits to SMB owners:
- An acquirer knows that doing a small deal is as painful as doing a large deal, so, given a choice, an acquirer will plump for the bigger private company. Therefore, size has a big impact on your ability to be acquired. It’s also why acquisitions quantum leap growth if you think big.
- In the same sector with similar growth prospects, the larger private company will attract a higher multiple of profits from an acquirer in pricing the deal.
- The higher the market share, the higher the profit margins, and the better the trade terms from suppliers.
- The acquisition of special people can sometimes only be achieved through an acquisition. Start ups acquired for their talent. All businesses are in the talent war, both acquiring it and nurturing it. Acquisitions bring a new level of growth prospects to a company, and staff are always attracted to an exciting narrative.
- To keep great people post-acquisition, you need careful planning and the creation of an entrepreneurial culture. The benefits can be huge: Google’s acquisition of Applied Semantics helped them develop the text-advertising network, AdSense, which is now a multibillion-dollar revenue generator.
- Acquisitions allow a deeper penetration of a vertical domain, e.g., telecoms, government. Or geographical expansion within a territory, or even overseas.
- An acquisition can allow you to offer your key customers solutions you know they need, especially as your industry is transforming. For example, ad agencies need to offer real digital talent, including development expertise.
- Scale brings the ability to spread bigger marketing budgets, R&D, and sales costs over more customers.
- A smart acquisition can bring a new, attractive business model into the family that can be nurtured over time.
- Speed of movement. A well-executed acquisition, integrated successfully, can shave years off the timetable of your strategic plans.
The Portfolio Partnership designs acquisition strategies, implements them alongside your existing team and arranges the funding of the deal.
