An acquisition deal is a business transaction that involves buying or selling shares, assets, stocks, material items and other things for the transfer of ownership rights from one party to another. A lot of the time it’s a case of a large business purchasing a smaller startup, which can be beneficial in many ways for both parties. The acquirer can benefit from up-selling and cross-selling opportunities with existing products and services, while the acquired company gets a quick injection of capital to support growth initiatives.
The primary motives behind a company acquiring another business include growth, expanding into new markets, bolstering brand recognition, accessing new technologies, increasing market share and leveraging synergies between businesses. While the secondary reasons vary, the primary one remains that M&A can accelerate the achievement of key business objectives far faster than organic growth can achieve.
As an example, the acquisition of Whole Foods by Amazon in 2017 was a major step for the company to boost its presence beyond its e-commerce and cloud computing offerings into the world of organic foods. The resulting synergies enabled the acquisition to accelerate growth and build its market value.
As the M&A landscape continues to evolve, there is a growing focus on thorough due diligence. This includes a deeper analysis of the brand, its people and culture as well as the wider industry in which it operates. This is in addition to a more comprehensive examination of the business’s financial reports.
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