M&A FOR SMEs
Often overlooked in business strategy, mergers and acquisitions (M&A) offer small and medium enterprises (SMEs) a route to growth, high performance, and market dominance.
This is done either by combining forces with another enterprise to form a new entity (merger) or by buying up and incorporating an existing firm – a competitor or business partner – under the buyer’s organisation or brand (acquisition).
Whichever route is considered, there are plenty of benefits to M&As for SMEs. These include being able to inject new talent and capabilities into the firm’s existing team, increasing customer share, achieving economies of scale and improving distribution networks.
There are challenges and pitfalls on the M&A road, however. Some estimates show that as little as 30 to 50% of M&As succeed in increasing value. M&As have to be planned just right, with plenty of due diligence, in order to proceed smoothly prior to, during, and after the M&A.
Besides reviewing tangibles such as assets and liabilities, issues may arise such as differences in firms’ structure, technology and even working culture between the two firms. This may give rise to friction and the ultimate failure of the process.
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