As markets become increasingly saturated, one way in which organisations can grow rapidly is through a Merger & Acquisition (M&A) exercise. However Mergers and Acquisitions (M&A) initiatives are often complex and come with many potential pitfalls.

Organisations looking to grow via a M&A exercise may face certain challenges including:

  • Lack of expertise in developing a sound M&A strategy.
  • Lack of relevant expertise in carrying out required due diligence work.
  • Failure to plan effectively and thus unable to fully reap the benefits of the M&A exercise.
  • Not recognizing the importance of a change & transition management plan as part of the post-merger integration process.

Although there can be many perils in a Merger & Acquisition (M&A) exercise, the high side is that there are numerous benefits from such an initiative including:

  • Economies of Scale with Increased access to capital, lower costs as a result of higher volume and a greater bargaining power with suppliers/distributors.
  • Economies of Scope that can be very challenging to achieve via organic growth.
  • Synergies in Mergers and Acquisitions with potential larger product/service offerings.
  • Increased Market Share via acquiring other competitors as a bid to increase geographical footprint.
  • Diversification of Risk as acquiring other businesses can help spread risk across various revenue streams instead of just focusing on one.
  • Quicker Strategy Implementation where a M&A exercise can be much faster to enter a certain targeted market versus starting/growing organically in that new market.

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