The first and foremost M&A wave hit the world of business in the late 19th century. And the ball hasn’t stopped rolling since then. According to a study, worldwide acquisition and merger transactions accounted for $2.2 trillion — that too in just the first half of 2022.
Strategic acquisitions are ideal for businesses that want to start exploring an entirely new industry or market, acquire specific talent resources, expand the business’s product line, or increase market share and access to expanding economies. They also create buzz, increase profits, and increase brands’ valuation. However, just about 10-30% of the acquisitions succeed.
Therefore, it is vital to understand a host of things while committing to an M&A deal. This begs the question – How do successful acquisitions happen, and what do they do differently?
To answer that, let’s look at three companies that have sworn by their acquisition-led growth and what they do right. Here is a deep dive into the same.
Yes, organic growth strategies can also help you achieve all that, but it won’t happen overnight. It could take years of constant effort to double your company’s evaluation.
Speaking of the current scenario, merger and acquisition (M&A) has emerged as a trending approach to business growth, helping businesses in the US expand their revenue multi-fold. To quantify the same, M&A deals closed at a whooping market value of 2.6 trillion USD in 2021. India and UK M&A markets have also grown to an evaluation of $130.3 billion and £4.5 billion in 2022, respectively.
Global Giants and Their M&A Portfolio
Google Acquired YouTube and Android
Google, more than most, is dedicated to a trial-and-error method across strategic functions. And that reflects in their acquisition strategy. Since it took the center stage, the company has acquired over 200 companies. This approach started way back in 2001 with the first acquisition of Deja News.
However, its most successful acquisitions have been Android (2005) and YouTube (2006). After the acquisition and its subsequent growth under the flagship of Google, Android holds over 70% of the entire mobile OS market. How did this benefit Google? Google integrated most of its applications with the android smartphones interface. This led to the massive growth of google applications and drove the ad business sharply forward when smartphones became ubiquitous.
As for YouTube, the deal was somewhere around $1.6 billion. As it stands, YouTube has now become one of the leading video-sharing platforms, with creators joining in from all over the world. The strategic planning of Google has helped YouTube to rise beyond measure, with 2022’s second quarter turnover amounting to $7.3 billion. Google’s strategy has been simple — acquiring all the resources to demand premium prices and show market supremacy across categories, including categories that don’t even exist yet!
Why Is This a Perfect Time to Adopt This Strategy?
COVID-19 pandemic hit the industrial market as a storm we never saw coming. It has made business owners more attentive and receptive than ever. Post-pandemic, as the global market has continued to be volatile, now is the right time for businesses to make an impact and sustain themselves for the future. Small acquisitions at this time can be beneficial for companies to stay ahead in the market competition by bringing in the right talent without having to deal with the hiring hassle.
The acquisition growth strategy is already gaining popularity among business owners. A yearly review of M&A reported that 80% of the deals closed in India by the end of 2021 were by new buyers. In the US, 21,107 M&A deals were reported in 2021, as compared to 15,103 that were reported in 2020. An exponential increase in numbers is expected in 2022 as well, making this an ideal time for M&A and gaining financial growth.
Close the Real Deal with GrowthPal
We at GrowthPal, offer a unique ecosystem that allows companies of all stages to choose and invest in the best acquisition deals. We use data-driven intelligence to ensure a secure and discrete transaction between the two corporations.
Having catered to more than 1 million startups, we have achieved maximized closing with 90% accuracy. Leverage our single-point ecosystem to accelerate your acquisition process – bringing it down from 3-6 months to just 2 weeks! Get in touch with our expert team to know more.