Beyond the Giants: How Smaller Companies Can Leverage M&A Deals for Growth

When most people think of mergers and acquisitions (M&A), they typically picture multi-billion dollar deals between industry giants. However, M&A is not just reserved for the biggest players in the game. In fact, smaller companies can also leverage M&A deals to drive growth and stay competitive in their respective markets.

Mergers and acquisitions have traditionally been associated with large corporations that have the resources and financial muscle to engage in such deals. However, in today’s fast-paced business environment, M&A has become an attractive strategy for small and medium-sized businesses (SMBs) looking to grow and gain a competitive edge. In this article, we explore why you don’t have to be a major corporation to leverage from M&A deals.

Access to new markets

M&A deals can provide SMBs with access to new markets, customers, and technologies. By acquiring a company that has a complementary product or service, SMBs can expand their offerings and increase their customer base. This can help them to gain a foothold in new markets and increase their revenue streams. Furthermore, M&A deals can provide SMBs with access to new technologies and capabilities that they may not have had the resources to develop in-house.

Scaling

M&A deals can also help SMBs to scale quickly and efficiently. By acquiring an established company, SMBs can bypass the time and resources required to build a business from scratch. This can help them to enter new markets, increase their market share, and compete with larger organizations. Additionally, M&A deals can provide SMBs with access to the talent and expertise of the acquired company, which can help them to accelerate growth and innovation.

Strategic partnerships and collaborations

M&A deals can provide SMBs with strategic partnerships and collaborations. By partnering with another company through an M&A deal, SMBs can share knowledge, resources, and expertise. This can help them to overcome challenges and take advantage of opportunities that they may not have been able to pursue on their own. Moreover, M&A deals can help SMBs to build relationships with other companies in their industry, which can lead to further collaborations and partnerships.

Challenges 

Despite these benefits, there are also challenges associated with M&A deals for SMBs. For example, the cost of an M&A deal can be significant, and there may be cultural and organizational challenges to overcome. Additionally, SMBs may not have the same level of resources and expertise as larger organizations, which can make it difficult to manage the complexities of an M&A deal. M&A deals can be complex and time-consuming, requiring significant resources and expertise to execute successfully. Additionally, the integration of two companies can be difficult and may require significant restructuring to align cultures, systems, and processes.

Solutions

Cost of M&A integration for SMBs is noticeably reduced, as in most cases businesses hire a pre/post merger IT integration team which can plan and execute the technology stack merger project and implement a central platform to fuel future growth (assuming that SMB that is looking for M&A possibilities is looking to grow).

Dedicated M&A IT integration teams are a good choice as:

• Short-term, one-time investment: you don’t need to hire large, permanent team that would plan and execute the merger, instead it’s very focused short to mid-term effort
• Cost savings: Executing M&A and then starting improvements project can cost minimum twice as much as combining these efforts – when planning and executing integration between systems, they can be arranged in according to future, scalable model
• Speed: the team does not have any other duties in your company apart from executing the merge – you can strongly leverage from time-to-market improvements as well as from execution speed (in most cases the speed depends on the SMB to do their homework on time). 
• Technology: Implementation of scalable platform to fuel your innovation, digital products and future growth 
• Clear strategy and realistic expectations. It is important to conduct thorough due diligence and carefully assess the potential risks and rewards of any deal. Smaller companies should also focus on building strong relationships with potential acquisition targets and seeking out partnerships that can help them achieve their goals.

M&A deals are not just for major corporations. SMBs can also leverage the power of M&A to grow, scale, and gain a competitive edge. By accessing new markets, technologies, and capabilities, SMBs can accelerate growth and innovation. Moreover, by partnering with other companies through M&A deals, SMBs can build strategic relationships and collaborations that can help them to overcome challenges and take advantage of opportunities. However, SMBs must be strategic in their approach to M&A deals, taking into account the costs, risks, and challenges involved. With careful planning and execution, M&A deals can be a powerful tool for SMBs to achieve their growth objectives.