Acquiring or merging with another business is one of the best ways to dramatically increase the size and scale of your company. But it’s not necessarily an easy process.
Here are the key advantages and disadvantages:
Advantages:
- Buying a competitor or complementary business means you take over their customer base, assets and intellectual property.
- Combining two similar businesses allows an entrepreneur to drive economies of scale and spread costs over a greater number of customers.
- Acquiring or merging allows you to bring new skills and products in to complement your own.
Disadvantages:
- Valuing a potential acquisition target is not easy.
- Integrating two businesses with each other can be difficult, especially when the businesses use different systems and processes, and have different cultures.
- Customers or staff may become dissatisfied with the merger process and leave.
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