Merger and acquisition deals have grown in regularity in recent times, with many companies now merging together or acquiring more companies to expand and grow their business. It has in essence become the definition of success in the corporate industry today, and deemed as a viable way for corporations to grow their business.
Acquisitions may be a good way to grow your business, but they can be very tricky as well, especially if you are not prepared to handle the excess baggage you will get along with taking over another company. In essence their problems become your very own, and you will have to take that factor into account when merging with or acquiring another company in the market today.
So how do major corporations avoid the pitfalls of merger and acquisitions so successfully without succumbing to them? The answer to that question lies in acquiring companies which are competing in different industries.
This is deemed as a smart and viable way to grow as well, since you will essentially be killing two birds with one stone. For example, if you are a manufacturer of a product, you will require a good distribution network that is well established for you to become successful in the market. Now there are two options for you, you can either build a distribution network, which may take time, and a considerable amount of money, or you could acquire a solid distributer to market your products and distribute them.
This will not only enable you to expand and grow your business in different markets, but also bring with it, the brand power of the company you have acquired. Understanding the basics of your industries business and adding the power of another company, which can enhance your business in other markets, is the basis of a successful merger and acquisition deal.
The basis of acquisition for many companies lies in becoming leaders in their very own industry. This can be done through five simple bases:
- Brand Power
- Superior Cost Position
- Customer Loyalty
- Government Protection
- Real Asset Advantage
Understanding and respecting these five bases for achieving industry leadership will allow your corporation to have a successful merger and acquisition deal in the industry today. The first step in growing your business successfully, is determined by the type of acquisition you undertake and the long term growth of your business following that acquisition.
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