{"id":2974,"date":"2023-02-19T16:11:13","date_gmt":"2023-02-19T16:11:13","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/mergers-and-acquisitions\/"},"modified":"2023-07-21T16:31:37","modified_gmt":"2023-07-21T16:31:37","slug":"mergers-and-acquisitions","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/mergers-and-acquisitions\/","title":{"raw":"Learn It 7.5.2: Mergers and Acquisitions","rendered":"Learn It 7.5.2: Mergers and Acquisitions"},"content":{"raw":"

Reasons for Mergers and Acquisitions<\/h2>\r\nThere are many good reasons for growing your business through an acquisition or merger. These include the following.\r\n
    \r\n \t
  1. Obtaining quality staff or additional skills, knowledge of your industry or sector, and other business intelligence. For instance, a business with good management and process systems will be useful to a buyer who wants to improve their own. Ideally, the business you choose should have systems that complement your own and that will adapt to running a larger business.<\/li>\r\n \t
  2. Accessing funds or valuable assets for new development. Better production or distribution facilities are often less expensive to buy than to build. Look for target businesses that are only marginally profitable and have large unused capacity that\u00a0can be bought at a small premium-to-net-asset value.<\/li>\r\n \t
  3. Your business is underperforming. For example, if you are struggling with regional or national growth, it may well be less expensive to buy an existing business that is already doing well than to expand on your own.<\/li>\r\n \t
  4. Accessing a wider customer base and increasing your market share. Your target business may have distribution channels and systems you can use for your own offers.<\/li>\r\n \t
  5. Diversification of the products, services, and long-term prospects of your business. A target business may be able to offer you products or services that\u00a0you can sell through your own distribution channels.<\/li>\r\n \t
  6. Reducing your costs and overheads through shared marketing budgets, increased purchasing power, and lower costs.<\/li>\r\n \t
  7. Reducing competition. Buying up new intellectual property, products, or services may be cheaper than developing these yourself.<\/li>\r\n \t
  8. Organic growth (i.e., the existing business plan for growth needs to be accelerated). Businesses in the same sector or location can combine resources to reduce costs, eliminate duplicated facilities or departments, and increase revenue.<\/li>\r\n<\/ol>\r\n
    \r\n

    Daniel Lubetzky, Founder of KIND<\/h3>\r\nWatch this video and learn about how Lubetzky immigrated to the U.S. from Mexico, started KIND as a small business, and grew it until it was acquired by Mars for $5 billion!\r\n\r\n[embed]https:\/\/youtube.com\/watch?v=sibESmao22A&si=EnSIkaIECMiOmarE[\/embed]\r\n\r\nYou can view the transcript for \u201cHow I Built KIND Into A Multibillion-Dollar Business\u201d here (opens in new window).<\/a><\/section>
    [ohm2_question height=\"300\"]3919[\/ohm2_question]<\/section>","rendered":"

    Reasons for Mergers and Acquisitions<\/h2>\n

    There are many good reasons for growing your business through an acquisition or merger. These include the following.<\/p>\n

      \n
    1. Obtaining quality staff or additional skills, knowledge of your industry or sector, and other business intelligence. For instance, a business with good management and process systems will be useful to a buyer who wants to improve their own. Ideally, the business you choose should have systems that complement your own and that will adapt to running a larger business.<\/li>\n
    2. Accessing funds or valuable assets for new development. Better production or distribution facilities are often less expensive to buy than to build. Look for target businesses that are only marginally profitable and have large unused capacity that\u00a0can be bought at a small premium-to-net-asset value.<\/li>\n
    3. Your business is underperforming. For example, if you are struggling with regional or national growth, it may well be less expensive to buy an existing business that is already doing well than to expand on your own.<\/li>\n
    4. Accessing a wider customer base and increasing your market share. Your target business may have distribution channels and systems you can use for your own offers.<\/li>\n
    5. Diversification of the products, services, and long-term prospects of your business. A target business may be able to offer you products or services that\u00a0you can sell through your own distribution channels.<\/li>\n
    6. Reducing your costs and overheads through shared marketing budgets, increased purchasing power, and lower costs.<\/li>\n
    7. Reducing competition. Buying up new intellectual property, products, or services may be cheaper than developing these yourself.<\/li>\n
    8. Organic growth (i.e., the existing business plan for growth needs to be accelerated). Businesses in the same sector or location can combine resources to reduce costs, eliminate duplicated facilities or departments, and increase revenue.<\/li>\n<\/ol>\n
      \n

      Daniel Lubetzky, Founder of KIND<\/h3>\n

      Watch this video and learn about how Lubetzky immigrated to the U.S. from Mexico, started KIND as a small business, and grew it until it was acquired by Mars for $5 billion!<\/p>\n