Two Ways To Expand Business Through Acquisition

OHST Transition Rulesnce your business reaches a certain position in the marketplace, expansion becomes the right move to make but where do you start? One of the most common ways for businesses later expanding through acquisition

Although expanding through acquisition costs money upfront, it is a solid business strategy for growth that can be accomplished through one of two methods:

  • Acquiring a similar client base that a competitor currently has
  • Acquiring additional products that your existing clients would use or benefit from

Method 1: Acquiring Clients From A Competitor

Let’s say you decide to buy a client list from your competitor because they’re going out of business or perhaps you want them to go out of business. The obvious first step is to either use a third party to approach your competitor confidentially or to approach them directly yourself.

Sometimes a third party can be helpful initially to get the ball rolling by helping you understand how interested your competitor is in selling, who they would not sell to, etc. If you are comfortable approaching your competitor directly to tell them that you’re in interested in giving them their retirement package in exchange for their clients, then by all means go for it!

This acquisition strategy is a great way to double your client list overnight but you need to remember that although those clients are similar to yours, they won’t ever be exactly the same. The game becomes figuring out how to get them from being the previous owners clients to now becoming your clients.

That’s a lot of work and doesn’t actually happen overnight.

Your competitor’s method of bringing in and servicing their clients will be different than yours. You will likely have to readjust your new clients’ expectations or personally change your expectation of what you’re going to do for them. Obviously you want the change for them to be a positive experience with better service but in any case, it takes time to complete the changeover.

Acquiring A New Product or Service

statute of limitationsIf you’re going to acquire a new product or service that’s going to be used by your existing client base then that is simply broadening your horizons. This is a much better position to be in because you have your clients, know how to service them and you’re just bringing in a new product to better service their needs.

I believe that this can be the much easier route but only if you can actually find that perfect match. It needs to be the kind of match that is a no brainer for your existing clients when you call them up to let them know about it.. The new product should work hand-in-hand with services you already provide. If you can luck out and find that perfect match, this is a really great way to expand your business.

Both Methods Have Their Merits

There is no question that both methods can be successful, when executed appropriately. The success of the transition in either case depends on your ability to find the right match and couple it with a strategy that can comfortably integrate your new acquisition in your existing structure.

If you decide that you want your business’ next stage of growth to be through acquisition, it’s extremely important to work closely with your advisor.  Poor planning and rushing through due diligence can turn your cash cow into a black hole that swallows every penny in sight so it’s worth being extremely well prepared.  After all, successfully achieving your growth strategy through properly executed acquisitions has at huge upside impact on your business.

For instance, the confidence of your existing and potential customers will increase as they see you taking action to position yourself as the leader in your industry.  Also, perhaps one of the most significant but often hidden benefits of an acquisition strategy, is that your entire team will now be much more “market focused” in identifying and bringing to your attention potentially valuable acquisition opportunities.

In summary, if expanding through acquisition interests you but to date has only made it to the “someday” to do list, then perhaps it is time to get really serious.  Take time to brainstorm with your team, discuss your ideas your advisor – simply put, do whatever it takes to develop and validate your acquisition strategy. My experience is that you will be glad you did!

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Free Report Opt In Message

Connect with Me

RSS Twitter Linkedin email

Our Latest Tweets