Scores of tech giants and other companies have been looking at M&A (mergers and acquisitions) as a reliable way to scale and expand across boundaries in recent years. They merge their business with other profitable ones or acquire as many entities as possible, giving them an edge over their competitors.
For instance, consider the relatively recent Atlassian Acquisitions that enabled the software giant to earn over two billion dollars in revenue in 2021. Its products are used by over thirteen million people employed in hundreds of thousands of companies worldwide, making Atlassian a titan in its own right.
So, how exactly does the M&A route help companies scale new heights? The following points will help you understand what makes it a fail-safe expansion strategy.
Enter new markets with credibility
A lot of sales pitching, networking, and similar efforts go into expansion to new markets traditionally. But when you use the M&A method, you can gain entry into exciting new markets with ease since your acquisitions are already established players in several regions.
Moreover, you will not be entering a new setting without experience or a reputable brand name to rely on. Instead, you will have the advantage of moving in as a recognizable and credible brand that has just bought out many of its competitors.
Invariably, the products and services you sell will quickly become some of the most trusted ones in the market as more people recognize and acknowledge your financial power. In turn, this will boost your profits by a remarkable amount.
Procure intellectual property
Merging with or acquiring other entities is the best way to gain new talent, skilled professionals, and a broad range of intellectual property. These include copyrights, trademarks, patents, and other intangible valuables. With the correct focus and the right time, you can convert these assets into technology, service, or products that bring you much financial gain.
Furthermore, when you retain the talented professionals that come with a new acquisition, they can help create strategies and plans that help your business grow. Also, since these professionals now work for you, you have invariably reduced your competition in the marketplace.
If there is one thing that Atlassian Acquisitions prove to their competitors, it is the fact that one can diversify their quality and quantity of work massively through M&A. The Australian software and development collaboration company started with a single tool called JIRA around fifteen years ago. It now provides scores of other quality tools such as BitBucket, Confluence, and Trello.
So, since the formidable software giant has acquired or invested in over thirty organizations in the last couple of years, it has widened its list of products and services. Your business can do the same if you start investing in, merging with, or acquiring companies you think will bring you similar results.
SaaS companies can also start using a GTM (go-to-market) orchestration platform to help segment and identify users most likely to convert to paying customers, formulating a plan to achieve this goal successfully.
This collaboration also helps them understand user behavior, communication details, and billing information to make the necessary changes to their products and services, effectively reducing subscription cancelations. Over time, this is an excellent way to scale your business effectively.