Over the years, companies have developed several different strategies for growing their reach and business. Two of the most popular methods are essentially two sides of the same coin: mergers and acquisitions.

Mergers and acquisitions, also known as M&As, allow companies to grow in size, bring new ideas into the fold, and even breach into new markets or industries. Yet using M&As as a way to grow a business can be difficult. Continue reading to get a better idea of how to do so.

How Do M&As Drive Growth?

The first question one might be asking here is: how do M&As drive growth? There are several ways to look at this answer. First, there’s the simple fact that two (or more) companies are being merged during this process. The result will be one larger company.

M&As drive growth differently, as they can allow a company to break into a new industry with ease. By merging or acquiring a company that already specializes in the desired industry, one can skip the earlier steps and delve right into the bottom line. For example, Disney purchased both Marvel Comics and Star Wars – allowing them to reach those fandoms alongside the core fanbase loyal to Disney.

Another way M&As can help a business is through resources. Company A may require specific tools that only Company B owns. While they can undoubtedly buy access to these tools, it may be better for both companies to consider a merger or acquisition. 

When to Apply M&As?

Next, one must ask when it is right to use mergers and acquisitions to grow their business. Ideally, a company should begin this process when they need to expand their customer base. This could be inside or outside of the industry, depending on preference.

Alternatively, a company may reach out to another in hopes of being acquired. This frequently happens when the original company is looking for more support or the resources of being a larger company.

Finally, M&As are a highly effective way to get into a global market. For example, a company hoping to do more business in Canada may acquire a Canadian company to help smooth out the process. This frequently happens, as larger investment companies prefer to diversity both in industry and locale.