Why Your Business Needs M&A Consulting

Most businesses will grow over time, in some way. The type of growth path you choose to go down can make all the difference to your profit margins. Internal growth can be a great strategy for small businesses, or businesses with fantastic brand recognition. However, if external growth is your goal then you will need mergers and acquisition consulting to get you on your way.

You always want to involve professionals and experts when you are considering major decisions in the business world. At the end of the day, whatever decision you do make has to be in the best interest of your business, and professional consultations and analysts will help you determine if now is the time to act, or if you should remain in a holding pattern.

M&A, or mergers and acquisitions, are the bread and butter of the corporate world and no corporation would invest so much time, capital and personnel resources in an M&A move unless the financials made sense.

When a business chooses to grow externally it means they want to see explosive growth in a short period of time. This is usually achieved by adding businesses to your portfolio that will help your core business. In other words, you may buy complementary businesses that increase your revenues more through ownership than they do simply by being a service or product provider.

Mergers and acquisition consulting is focused on making sure you make the best possible deal. They do this through valuations of companies that could be a good fit with your current business. Once they have a few targets for you, they run the numbers to see where you will get the most synergy.

Synergy: Additional revenue created by two businesses coming together in an M&A scenario; this revenue goes above and beyond what the businesses generate individually.

Obviously you want to make a purchase that will generate as much synergy as possible. It is pretty incredible that your business, making $100,000 annually, and a separate business making $100,000 annually can come together and generate $300,000 annually, for example. That new $100,000 that just seems to magically materialize is the synergy of this imaginary M&A scenario. But is it really magic?

No, of course synergy is not magic. It is numbers at work and an example how your money can work harder for your business. Either way, synergy can be created by smart investing, and smart investing can be achieved when you have great mergers and acquisition consultants on your side.

When you purchase a complementary business, you lower a lot of your costs. Usually a complementary business will play some role in your supply chain, or perhaps simply be a great addition to your existing products and services. Buying a business with good brand recognition is a bonus too because it gives you a captive audience for your other products. A good acquisition can save you money on overhead costs, reduce your personnel needs, bring visibility to your brand, lower your marketing costs, and even warrant a rise in product pricing, etc. If you can reduce costs enough or warrant increasing your product pricing, you create larger profit margins on top of your existing revenues and on top of the revenues from the acquired business. This is how you get synergy.

This is all a part of the valuation and analytics your mergers and acquisitions consulting firm will provide. Don’t be afraid to grow. With the right team on your side you can make a great deal and watch it succeed.