In this present day’s fast-paced business world, collaboration and strategic mindset is the key to growth, whether you are a startup CEO, an established entrepreneur or Corporate leader. Understanding the dynamics of business partnership through merger and acquisition will go a long way in helping you attain growth and maintain success.
Let’s break it down!
- Business Partnership is shared vision, and shared success.
Business Partnership is one of the simplest form of collaboration, it involves the coming together of two or more individuals or organizations to achieve a common business goal. This partnership allows each party to contribute the resources needed to achieve their aims ranging from capital, skills, strategies, talent and share profit, losses, risk and decision making.
Benefits of partnership
- Shared resources and skills
- Combined capital and shared risks
- Improved decision making and delegate responsibilities
However, for partnership to thrive, there must be a clear line agreement between the two parties outlining the responsibilities, profit sharing terms and roles.
Transparency and trust remains the key to a successful partnership.
- 2. Merger: Two become one
Merger involves the coming together of two companies to become one strong entity. The sole purpose is to improve operational efficiency, reduce competition and expand market share.
There are three major types which includes;
- Horizontal Merger: The combination of companies in the same industry
- Vertical Merger: it’s between companies at different stages of production to improve quality and reduce cost
- Conglomerate Merger: it’s between companies of unrelated industries, focuses on diversification and spreading risk across different markets.
Merger, if executed strategically, can lead to broader customer base, innovation and increased profitability.
3 Acquisition: Gaining strength through ownership
Acquisition takes place when one company purchases another company and takes full control of their operations. Unlike a Merger, an acquisition involves absorption of another business.
Why companies pursue acquisition
- To access new market or customers
- To acquire new talents, technology and intellectual property
- To strengthen competitive advantage
While acquisition can be a powerful growth strategy, they require careful due diligence and strong leadership to ensure a smooth transaction and long term success.
A typical example is the recent update of Wakanow, a tech travel agency, which just acquired Nairabox, another company known for entertainment and lifestyle, to expand, diversify and give their customers all in one package. (Ref punch newspaper)
Choosing the Right Strategy
Every business collaboration, whether partnership, Merger or acquisition should be guided by clear objectives.
Choosing the Right Strategy depends on the company size, resources, risk tolerance and long term goal.
So ask yourself?
- Should we do shared ownership (partnership)?
- Should we combine forces for mutual growth?( Merger) Or
- Should we expand by taking control?
Understanding these differences helps in making informed decisions that align with your business vision.
In conclusion;
The main end essence of partnership, Merger and Acquisition is strategic collaboration.
Growth is not all about competition, it’s about setting a lasting value. Success depends on clarity, trust and shared purpose regardless of the strategy used.
Are you ready to take your business to the next level?
Here at Dealpartners Africa, provide due diligence, valuation and compliance/license advisory service to make your partnership, merger and acquisition strategy seamless
we work you through the process and steps to achieve long lasting success. Call;0703 114 4700 or a email clientdesk@dealpartnes.africa . Your business success is our priority.
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