Blog

3 Benefits of an Acquisition

There comes a time in a business lifecycle that the owner decides they want to grow their business. The fastest way to grow your restoration business is through acquisition. Acquiring another business can be expensive, as you are purchasing another company.

There are organizations like the Small Business Association that continues to provide government funding for acquisition financing. However, you can, as an owner finance an acquisition yourself, but this is rare. Acquisitions fall under the idea of horizontally integrating. This is a strategic management concept in which you gain control of your competition by acquiring competitors, increasing your market share, and obtaining their resources and capabilities. This in the end will give you a competitive edge over your competitors.

With this in mind it is clear there are many benefits from an acquisition, but here are the top three:

  • Fast Growth: An acquisition can automatically give you access to another customer base.  Acquiring a company with related services can give a loyal customer base who uses these additional services that you now own. In some cases this means expanding your territory in the event your business is a franchise. Therefore, growth will be a natural result to acquiring a related business.
  • Resources and Capabilities: An acquisition gives you access to other talent and equipment that otherwise would cost you time and money when starting from scratch. Acquiring a company gives you more resources and capabilities to work with. This acquired company, as stated earlier, may offer new services that complement the ones you offer, adding to the resources and capabilities you already have.
  • Cash Flow: Last but not least, it increases cash flow. By having a set of customers and jobs in the pipeline will automatically give you access to cash flow you didn’t have to generate. Acquiring an already established business with committed customers will ensure that the services of the new company will be used with the possibility that they will begin to use some of the original services as well, which leads to increased cash flow.

Acquiring another business can be tricky, but well worth it if it is done the right way. It can create that extra revenue and even give you the extra stability you need, giving you an edge over the competition. Growth, by adding extra services and an established customer base, obtaining resources and capabilities, as well as increased cash flow are what you will be rewarded with when acquiring the right business. Acquiring a business will eliminate the risk of seeing if a service is truly needed because it has already been done for you by the business acquired. There are many benefits to acquiring another business, all you need to do is find the right one.

Interested in benefiting from an acquisition? Contact us today to get in touch with our restoration business experts. We work with you to help your restoration business grow and get you prepared for selling.

 

Topics: finance

Gokul Padmanabhan

Written by Gokul Padmanabhan

Gokul Padmanabhan has devoted the past 15 years to buying and selling businesses, much of that in the restoration industry. His partnership with RESCON Business Brokers strengthens his hands-on expertise with a national presence and infrastructure that is second to none.

Comments: