December 2016 — Companies have historically explored multiple strategies for corporate growth, including expanding market share, realizing economies of scale, and increasing diversification. However, even with an optimistic industry view, many companies struggle to grow organically and an effective M&A strategy serves as a critical growth driver.
Undoubtedly, M&A is far from an exact science, and the success of an acquirer is dependent on a multitude of variables. While any single deal can be risky as a standalone strategy, when viewed as a long-term corporate strategy, acquisitive growth can drive higher returns to shareholders through all economic conditions.
Our research demonstrates that companies across all industries who employ a portfolio building strategy outperform the competition over time. Frequent acquirers experience the most success, and the majority of their targets fall into the $50-$300 million E.V. range. Successful acquirers typically seek to achieve positive returns through growth into adjacent product lines, geographic diversification, and increased market power.
Through a measured strategy of target identification, significant value can be created by building a portfolio of acquisitions rather than simply returning capital to shareholders. Critical to this strategy is the right internal corporate development team partnered with the right external advisors, working in tandem to build long-term company value.
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