Mergers and Acquisitions (M&A) have become a commonplace strategy for lower middle market companies today \u2014 and many times, the transaction (such as a merger, acquisition, purchase of assets or consolidation) is a critical turning point in a company\u2019s life.<\/p>\n
While the intention is unique to every organization, it is based on the idea of creating more value. Buyers look to drive growth, with sellers often focusing on wealth maximization, a need to monetize business or sell-off ancillary divisions to focus on core business units.<\/p>\n
Here are five of the most common reasons businesses merge with or acquire other companies:<\/p>\n
1. Creating Synergy \u2014 Synergy is a frequently used term in the world of M&A, referring to the idea that two heads are better than one. So, a business will acquire or merge with another business that has complementary strengths and weaknesses, whereby performance and cost control can be increased.<\/p>\n
2. Support Expansion & Growth: Companies earn market share over time, but it can also be acquired as an intended by-product of many M&A deals \u2014 such as a horizontal merger. This also helps expand geographic reach, increase industry expertise or invest in capabilities, technology, talent and new assets.<\/p>\n
3. Eliminate Competition: Companies seeking to sharpen focus often merge with companies that have deeper market penetration in a key area of operations. So many M&A transactions allow the acquirer to eliminate its competition within the market or product category.<\/p>\n
4. Helping Diversify: Companies will merge or acquire a business in an outwardly unrelated industry to help manage risk and reduce the impact of a particular industry’s performance on profitability.<\/p>\n
5. Enhance Supply-Chain: Businesses that work with many suppliers or distributors will participate in a buyout, acquiring one of their providers of materials or a distributor to help eliminate costs, such as supplier margins or shipping costs.<\/p>\n
While success can happen organically, M&A drives the greatest growth among lower middle market companies \u2014 and M&A may be a beneficial strategy for taking your company to new and exciting heights. Contact the Auctus Group to learn more about M&A and other advisory services it provides clients.<\/p>\n
Auctus exists to help businesses identify opportunities and navigate their way through M&A transactions to achieve favorable outcomes, maximize value and create steady growth.<\/p>\n
Whether our client is public or private or selling a business unit or the entire company, we have a passion for what we do and dedicate senior bankers to every transaction from start to finish. In addition, Auctus offers hands-on experience within corporate development, venture capital and growth equity investing.<\/p>\n","protected":false},"excerpt":{"rendered":"
M&A has become a commonplace strategy for lower middle market companies today. While the intention is unique to every organization, it is based on the idea of creating more value. Here are five common reasons businesses merge with or acquire other companies…<\/p>\n","protected":false},"author":1,"featured_media":7103,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[4],"tags":[],"acf":[],"yoast_head":"\n