If you run a company, you could conduct an add-on acquisition to strengthen your competitive positioning, increase your cash flow and improve your overall financial metrics. Ultimately, it’s a great way to increase the company’s valuation and shareholder value.
You can leverage an add-on acquisition to strengthen your competitive positioning in the marketplace. You could buy a company to increase your customer base, extend your product offerings, broaden your geographical reach or become more vertically integrated – there are many options.
Also, add-on acquisitions typically have significant revenue and cost synergies so the transaction pays for itself quickly. On the revenue side there are often notable cross-sell and up-sell opportunities to the combined customer base. And on the cost side, there are often redundant operational functions that can be eliminated which reduce costs, along with economies of scale cost savings that can be realized.
You can achieve many benefits through an add-on acquisition, including:
- Grow your business faster
- Increase your annual profits and overall company valuation
- Expand your service or product line
- Expand into a new geographical market
- Buy out an competitor – and increase market share
- Decrease your risk by diversifying your business
- Work less day-to-day – and have a broader team to help you