The final piece of the puzzle revolves around inorganic growth through mergers, acquisition, or partnership. Many of the companies in the study were in some way involved in collaboration of this kind, though few were actual winners. Those that did succeed tended to do a relatively frequent number of smaller deals, versus larger and more sporadic alliances, and in doing so most of the transactions resulted in real return on investment within three years. And as with strategy, the majority of the winning deal activity revolved around the company’s existing customer relationships and core business versus entirely new areas.
Some companies chose against moving forward with a merger or acquisition and instead chose a partnership. Doing so allowed two or more businesses to combine talents to create a new offering without requiring complete homogenization of two companies becoming one.
Whatever the case, the Winners in the 4+2 study were devoted to their respective merger, acquisition, or partnership, ensuring that the company wasn’t just committing to deals for the sake of deals, but instead had a system to identify, screen, and close. In order to succeed, time and financial resources must not only be invested appropriately, but each party in the deal must also make certain that they are working towards a common goal, versus a mutually exclusive objective. As such, selecting the right partner is largely the most important aspect of any collaboration of this kind.
How Avidium can help
Avidium works with clients on due diligence efforts, paying particular attention to the “softer” components, especially those that touch human resources. Our counsel runs across both M&A and partnerships, and we support companies that are looking to build lasting bonds that are less about business diversification and more about identifying and capitalizing on synergies, or acquiring businesses that complement strengths. We also work with companies on establishing the tools and techniques required to spot and process realistic and fruitful deals, so that our clients can vet prospects long before actual engagement.