We’ve previously outlined three strategies to grow your business organically, solely from its own business operations. We now take a close look at the other alternative: inorganic growth, which refers to a company growing externally as a result of acquisitions and mergers.
Inorganic growth is often an attractive strategy, since it’s a relatively quick way to increase profits. It’s also a risky strategy, however, and must be carefully planned. Sudden growth must be met with preparation in order to handle the new demands of the business and ensure a smooth transition.
Advantages of External Growth
The external growth of a business has a number of distinct advantages. It may help cut competition and opens up access to:
- new resources, skills and knowledge
- an increased market share
- an increased customer base
- new segments of an existing market
- new distribution channels
Mergers vs Acquisitions
An acquisition means one business is fully taken over by another entity. A smaller company is often acquired, and becomes part of the larger business and ceases to exist. A merger, on the other hand, arises when two separate businesses combine to form a new, joint organisation. This is the result of a deal between businesses who may decide on growing through horizontal or vertical integration.
- In horizontal mergers, two companies in the same market merge, decreasing competition as a result.
- In vertical mergers, the merging companies are in different stages in the supply chain process within the same industry.
How can Berley help small businesses?
Whether you’re considering an acquisition or a merger, formulating an appropriate business strategy and skilfully executing it is the key to the successful external growth of a business. Run your growth plan through Berley and we’ll provide extensive insights into how you can find the best strategy for your business. With over 30 years of experience in business growth, we can help you establish a solid foundation and strategy to grow your business in 2018 and beyond.
So call us today on 020 7788 8261 to get started.