Published On: Thu, Jan 4th, 2018

Max Lami looks to ‘merger and acquisitions’ for growth strategy

Mergers and acquisitions are more and more becoming the go to solution for businesses looking to expand into new markets, territories and locales. It allows for a fast absorption of skill sets and new technologies, preventing the issues that come with trying to adapt to a new market. Just look at how Facebook and Google time after time snap up new apps and booming tech.

Image/bykst via pixabay

Essentially there are two forms of business merger – financial and strategic.

A financial merger is pursued simply to generate cash or as a longer-term investment. A strategic merger is more interesting; these offer a solution to a business problem. Often times companies require new expertise or intellectual property to help enter a market and they can work around time consuming recruitment by merging or by acquiring a firm.

Max Lami has said that Oppenheimer and Co are looking to acquire new healthcare and consumer bankers to help further their business portfolio and secure growth for the future. It is no surprise that mergers and acquisitions is the direction Max Lami is trying to head his business towards, with potential growth from these deals being unlimited.

Looking at the growth strategy behind merger and acquisitions, it is clear that these deals make perfect sense in a wide array of scenarios. Fast, decisive action is often needed to either defend against a competitive threat or to exploit a gap in market and expand.

When do merger and acquisition growth strategies become effective?

  1. Fill gaps in client lists or service offerings – when a marketplace changes due to an external event or new law, it can create a gap in a firm’s services. This is a great time for a strategic merger.
  2. Acquiring intellectual property and talent – intellectual property and the brains behind them are integral to businesses nowadays. These acquisitions can help firms offer a broader range of products and services, allowing for huge growth. Take Facebook’s acquisition of Instagram – one of the most used apps in the world. Acquisition is often the fastest way to market domination.
  3. Save time and long learning curves – merging or acquiring a firm that is an expert in a specific sector can be a fast way of gaining the expertise that otherwise would require a time-consuming hiring policy to identify good quality employees or train existing employees.

There are certain issues that need to be kept in mind when deciding to grow via mergers and acquisitions. A huge barrier to mergers is the business culture of your firm versus theirs. A clash of cultures is often the greatest cause of merger failure. Brand strength and marketplace confusion are two other factors that need to be taken into account, as mergers can have an effect of altering the perception of the brand.

Author: Shan Ge

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