An acquisition deal involves a business purchasing and combining with another to create a bigger entity. This could be to improve market share, to gain a competitive advantage, or simply to boost revenue. A key part of the process is due diligence which consists of both parties conducting investigations into the other for various reasons, such as legal or financial.
The benefits of acquisition include increasing brand recognition, gaining new clients and markets, and accessing new technologies and distribution channels. Additionally, it can be a way to reduce costs and save on overheads. A good example of an acquisition is the US brewery, Anheuser-Busch InBev, acquiring the world’s biggest brewer, SABMiller, which gave it a presence in several countries and continents that it otherwise would have had difficulty reaching.
One of the major drawbacks of an acquisition is that some employees may be made redundant as a result. However, the right kind of change management process can ensure that those who remain benefit from the deal and are retrained for new roles in the combined entity.
There are also many examples of small companies flourishing after being acquired by larger businesses. Pixar, for instance, got bought by Disney and went on to reach billions of people worldwide. This growth is possible because it allows smaller companies to access a team of experts for advice on the key aspects of business such as marketing and production, thus giving them more room to expand.