Are Acquisitions the only way to Grow? NO!… but are probably the quickest way!
What about Organic Grow?
Organic growth is slow and most of the companies are very impatient when it comes to seeing results. Today, is hard to grow in the spinal market. It may take a lot of work and time.The approaches you can take to grow your business organically are mainly to sell more to your existing customers, expand geographically or steal customers from a competitors.
Growing your business organically gives you the flexibility to grow as money, time and resources become available. A huge risk to internal business growth is that while you’re growing organically, your competitor’s growth may snowball through a business acquisition. You could quickly go from being a market competitor to being the underdog.
Internal growth has lower upfront costs compared to acquiring a competitor, but there is still an investment involved. Long-term, plowing your profits back into your customer service or sales departments can strengthen your customer relationships as well as attract new customers. You may find, however, that you’re spending just as much over time as you would if you spent a lump sum to buy a business.
Which are the advantages to Grow through Business Acquisitions?
Business acquisitions are becoming popular because they are a quick way to grow. They are ideal for short-term goals, but you will spend a lot of money upfront to bring in a large customer base quickly. This growth strategy has several risks.
Although external business growth brings an immediate increase in market share and greater access to capital and new markets, it also brings management challenges such as overreaching span of control, integrating systems and people, and branding.
Acquiring a business can also pull you away from your core business. You could discover that you don’t like the employees, customers or the market, or they don’t like you. If you choose to grow your business externally, you need to strategically handle customer loyalty and the fear of a big brand moving in on local shops. You also need an effective plan for integrating management teams, company cultures and support systems.
How Popular are the Acquisition strategies?
In such a crowded market as spine they are becoming very popular
since acquisitions are a form of inorganic growth when the organic growth gets more difficult because the market has matured and it is not longer in its growth phase. There are Four main reasons:
- To gain Market Share: The fastest way to increase market share is by acquiring companies: Ex: Stryker had 6% of the market and increased up to 11% by acquiring K2M.
- To fill the gaps in the product portfolio
- To enter in a new Market Segment as Medtronic did when they acquired Sofamor Danek.
- Acquiring Distribution.
According to the Boston Consulting Groupo, there’s plenty of evidence to show that acquisitions activity can be a boon to corporate growth. But there is no one-size-fits-all approach that can ensure success in this area. Take a look at six ways companies can “buy” growth through acquisitions.
- Roll up. Enjoy a greater market advantage by buying direct competitors to increase the company’s scale and scope.
- Feed the machine. Acquire early-stage companies to fill your R&D pipeline and take advantage of a more mature distribution network.
- Enter adjacencies. Scoop up businesses with products and capabilities that relate to your own, or that can benefit from access to your existing resources.
- Leverage strengths. Acquire companies in the same or similar industries. Then use their strengths to bolster your own.
- Accelerate access. Merge with a like-minded business in order to gain access to new geographies or customer segments.
- Open new doors. Diversify into higher margin or higher growth industries by acquiring a company in an unrelated sector.
During the last 3 years, we have posted about 75 acquisitions starting with
NuVasive takes over Ellipse Technologies for $410M (2016/01/05 ) at the beguining of 2016 until today with RTI Surgical® Shareholders Approve Paradigm Spine Acquisition.To Learn about all the acquisitions that have taken place in the Spinal market, please visit: http://www.thespinemarketgroup.com/category/acquisitions/
SOURCES: Boston Consulting Group/ and .links-financial.com/