07 May Accelerating Business Growth via Acquisition
By Anthony J. Citrolo, CPA, CM&AA
You’ve built a successful business, hired a reliable staff and you’re turning a consistent profit. Now you are ready to scale. So how can an existing business accelerate growth?
It is a common path for entrepreneurs to first consider more organic ways of growing their business through sales and marketing. Trade shows, targeted advertisements, sales calls, etc. work to bring new customers over time. But what if you want to grow FAST?
This is where acquisitions come in. Right now, the business for sale market is flooded with well-established, profitable and stable businesses that are ready to be taken on by a new owner. Baby boomers are ready to retire and sell their businesses. These businesses are often prime acquisition candidates.
As a current business owner, the upfront costs of acquiring another business for growth may seem intimidating, but the rewards can be rich. Acquisitions give you the opportunity to immediately expand your customer list, employee base, equipment, etc. This can also give you the ability to offer your current customer base an extended repertoire of services or products. Buying an existing company that is showing current growth can also be easier to obtain financing for and over time could cost you less than trying to create the same outcome organically.
Acquisitions can be made horizontally or vertically. Horizontal acquisitions involve purchasing another business that does the same thing you do, such as a local competitor or a similar business in another geographic market. Horizontal acquisitions are a great way to quickly grow your customer base, add to your employee talent, or expand into a new geographic location. Vertical acquisitions involve purchasing another business up or down the supply chain, such as one of your suppliers or customers. Vertical acquisitions are an excellent way to achieve greater efficiencies and keep the profits that your supplier or customer would make off of doing business with you.
Before you dive into an acquisition, it is important to examine your goals and develop a strategy so that you can make an intelligent acquisition. Not all acquisitions are made equal, so it is critical to thoroughly plan, evaluate and execute to achieve a positive outcome for both your current business and the business you acquire.
If you would like to discuss this article or schedule a private and complementary consultation, please contact Anthony at anthony@nybbinc.com or 516-346-5272.
