M&A operations are not exclusive to large corporations or nationally and globally recognized companies. They can also be a growth and expansion tool for smaller companies.
Mergers and acquisitions are often the way for businesses with a more regionalized reach to enter other markets and expand their operations. In this article, we will understand a little more about it.
What makes a small or medium-sized company go through a merger and acquisition process?
We can consider a series of factors that motivate microenterprises to consider a merger or acquisition as a growth strategy, whether in the medium or long term.
When a small business feels the need to take a step forward in its expansion process, but realizes that it still does not have the necessary robustness to do it on its own, joining a larger organization is an alternative that can accelerate this journey.
This happens, for example, when that retailer in your city becomes part of a large national network, either by selling part of your operations to this group or integrating the two parts.
Regionalization is a characteristic that is very present in small companies, which generally operate only in a single market. When there is a desire to expand this scope of action, M&A operations also emerge as a viable option.
It is also quite possible that smaller companies do not have properly professionalized operational flows and processes, even due to a more limited financial disposition. This may also be one of the reasons why these businesses look for partners that can acquire or join them to improve their operations.
Inverse situations also frequently occur, with large global conglomerates seeking to acquire small companies in order to intensify their market power. Google, Amazon and Microsoft are just a few that figure in this relationship.
Transactions that have occurred throughout history.
If we were to draw a timeline and do a historical recap, many mergers and acquisitions of small and medium-sized companies not only happened several years ago, but also ended up being part of our lives in some way.
Long before the term “Digital Transformation” became popular, companies linked to the technology sector were already moving the M&A market and sought to fix their growth proposals with negotiations that definitely transformed this scenario.
Almost everyone remembers when Youtube emerged, still in the first decade of the 2000s, with a completely different proposal for the time, which led to an inevitable growth.
But, long before the most famous video platform became the giant it is today, Google, aware of its rapid adoption among users, acquired it for an amount of almost 2 billion dollars — that in 2006.
One of the most successful brands in website hosting, Locaweb, also consolidated a good part of its business progression with a tactic that consisted of buying around 20 startups.
Surely, you’ve come across “Guarana Jesus” on a supermarket shelf. But, a while ago, you would only hear about this product if you visited Maranhão — its state of origin and the place where it became a tourist souvenir.
This only happened until Coca-Cola entered history and acquired the traditional drink from Maranhão, around 22 years ago, and secured the passport for its nationalization, with a distribution plan that began in São Paulo, Minas Gerais and Paraná.
In the vehicle leasing business, Localiza is also an example of a company that started small, in the 1970s, and has grown over the years, also supported by an acquisition strategy.
Little by little, it was acquiring its smaller competitors and, recently, it took a leap in its expansion by working in partnership with Hertz. The result? More than 500 branches spread across several countries and consolidation as one of the largest on the continent in the segment.
Is it really worth selling, buying or integrating with small and medium-sized companies?
Given the examples provided, it is possible to conclude that many transactions involving small or medium-sized companies had a positive outcome and resulted in growth for both parties involved in the process — both the acquirer and the acquirer.
It is important to understand which objectives are outlined in the business plan and whether mergers and acquisitions are strategic tools that enable them to be achieved with greater efficiency.
A tip for you who still have any doubts, is to seek an Advisory </a >to seek more in-depth information on the subject and verify market possibilities that can be advantageous for the growth of your business
