Expanding your business through M&A or organic growth

Expanding your business through M&A or organic growth

 So how is JLA achieving what seems like the impossible for many small businesses? The fact that its products and services are niche and in demand among growing sectors, such as care homes and hotels, has much to do with it. The company has developed laundry technology that helps to reduce the spread of infection, which means it has a strong appeal to hospitals, while its products also helps customers cut costs.

 So when should a small to medium business think about buying or merging with its competitors? One of the main reasons that small businesses decide to acquire is because they are operating in an extremely fragmented market. When a large number of businesses are competing for a relatively small market base, it is possible that none will truly succeed as price wars ensue and profits suffer. When a situation like this occurs, the businesses involved lose out, with little opportunity for growing market share, and customers are also affected as so little cash is available for investment in new products and services.

 Firms that decide to merge in this situation, thus consolidating their market and increasing their share, can markedly improve the business and turnover, enabling them regain control of pricing and strengthen their negotiating position with suppliers.

 However, it is always vital to look after new and long-term personnel during and after the deal process, as losing staff can very quickly reduce the value of a target business. Paying the right price is also vital and can make or break a deal in terms of its long-term impact on a small business.

 Finally, businesses that are merging need to assess whether they are compatible with each other, while sales teams and marketing should be carefully evaluated and controlled to avoid firms competing with each other after a merger has taken place.