With the coronavirus lockdown leaving large numbers of Americans confined to their homes and apartments, food delivery has become headline news as restaurants have scrambled to respond to industry-wide changes.
But in the business world, food delivery has become a big story for other reasons, following the June announcement that Just Eat Takeaway would be acquiring Grubhub for $7.3 billion. The move gave the Europe-based company a foothold in America's lucrative delivery market, making it the largest food delivery business outside of China.
In a year that has seen plummeting stock prices, mergers and acquisitions have proven to be one of the more reliable ways for businesses to expand or consolidate in the face of significant economic uncertainty.
But it isn't just corporate giants like Just Eat Takeaway who can leverage the power of acquisition to break into a new market. Businesses of any size can use mergers and acquisitions to expand their operations quickly without overextending themselves in the process.
The Benefits of Expanding by Acquisition
There is any number of reasons why a business might choose to expand through acquisitions, but the three most common are:
- Access to new clients or customers
- Opportunities to improve profits by pursuing margins and economies of scale and reducing overhead
- Supply chain consolidation
Every acquisition or merger is undertaken with specific goals in mind, but the most successful mergers are part of a long-term growth strategy built around leveraging the greatest possible market share.
How to Pursue Mergers and Acquisitions
If you think a merger might be a good way to consolidate your market share, or move into a new region or industry, here are some tips for how you can get started:
- Do Your Research: If you're branching out into a new region or industry, it is imperative that you figure out who the major players are. This will give you a sense of who your competitors may be, and will help you enter negotiations on a more informed footing.
- Assess the Health of Both Companies: Mergers can pay off big, but they also involve a certain degree of risk. Assessing the health of your company and the company you want to acquire will help you identify potential problem areas.
- Hire M&A Advisors: If you aren't a major corporate player, the best way to make sure you navigate the complex legal and financial aspects of the process are to hire a company like Beacon Mergers & Acquisitions that specializes in working with small- to medium-sized businesses. M&A advisors handle everything from identifying potential targets to assisting with due diligence and providing guidance during the negotiations.
Getting the proper professional help to manage the merger will help you avoid common pitfalls in the process, and ensure that the move is as sustainable and profitable as possible.
If your sales are stagnant and you've exhausted the avenues for increasing revenue, but aren't seeing the kinds of profit that would allow you to undertake an organic expansion into new regions or markets, mergers and acquisitions can be the fastest and most effective way to grow your business.
But while mergers and acquisitions can be a way to achieve sustainable growth, the process is complex. If this is a path you're considering, make sure you have mergers and acquisitions advisors in your corner to help chart a way forward.