Phil Thow teaches that acquisitions play an important part in the business model. Phil Thow suggests it should not be taken lightly. The decision should be based on where the two companies are headed separately and how they could move forward using each other’s resources effectively to achieve like goals.
According to business management expert Phil Thow, acquisitions usually occur in like business environments. It is important to remember that an acquisition is different from a merger in which two companies combine their strengths and weaknesses into one company in order to form a larger single unit. Typically, an acquisition remains its own separate unit as a division of the acquiring company.
Phil Thow teaches that acquisitions play an important part in the business model. Should a company want to get involved in expansion, it may be more financially prudent to pursue an acquisition rather than start and entirely different business. Expansion without acquisitions means the acquiring company would have to purchase hard assets, hire new staff and in the context of a complementary market may have a sharp learning curve. This may not be seen as beneficial or cost effective. Thus, seeking out a company who may want to be acquired is a smart business decision.
From the standpoint of the target acquisition, it may give them an opportunity they otherwise wouldn’t have, especially if their particular company is in a downturn. The option of being acquired is attractive for many reasons not the least of which are, staying in business and possibly expanding, not having to lay off key employees, and combining like synergies with the acquiring company. More times than not, according to Phil Thow, acquisition for the target company is a win-win situation. Phil Thow says acquisition for the target company also allows them to keep their autonomy, unlike a merger where they are basically swallowed up by the acquirer.
The question to start a merger or an acquisition is tough. Phil Thow suggests it should not be taken lightly. The decision should be based on where the two companies are headed separately and how they could move forward using each other’s resources effectively to achieve like goals. An acquisition can quickly add to a company’s bottom line and expand the width and breadth of the acquiring company’s business exponentially. The competitive advantage of acquisitions should be considered as well. Acquiring a competitor could very well be a smart and profitable move.
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