Perhaps more than any other organizational change, effective change management is crucial to make acquisition a success. The change management team must effectively assess the company culture of the new company and work out how to assimilate it into their own. Asking questions such as how is productivity measured, what does success look like and how are employees rewarded are the first steps in ensuring employee engagement does not take a nosedive.
Compared to organic growth, acquisition is a fast way to scale up a business. You have instant access to new resources and competencies that your business alone may be lacking. And the new product lines, new markets, and new customers are yours right away.
Most companies follow a standard life cycle that takes them from introduction to the market at the company’s inception, through a growth period before they reach maturity. This point typically signals the start of a decline. For most businesses, their average growth rate tops out at around 15 percent. If a market is going through a growth period, perhaps this will accelerate. But it times of decline, businesses must look to take market share from a competitor to retain anything like this level of growth. For businesses looking to stave off their decline phase or maximize their period of growth, acquisition is an essential tool.
It’s hard to build a startup. Around 90% fail, usually in the first five years. Even venture-backed startups never earn a return 75% of the time. This presents a dilemma: Do you risk your time and money building a startup from scratch or acquire one with a proven track record?