Acquisitions as opportunities for business growth
It is crucial to be able to open new markets, which often provide the best opportunities for growth, especially if this is accompanied by a widening of the range of products or services and, moreover, the acquisition of new technologies. Acquisitions can be an important opportunity.
The company’s growth can take place by “internal” or “external” lines.
Internal growth takes place in a balanced, consistent, slow and gradual way and requires:
– a well thought-out (and often costly) investment
– a certain entrepreneurial capacity
The external growth increase the market size externally (rather than internally expanding their corporate structures) and achieve synergies by one or more transactions such as mergers or acquisitions of companies (or parts of them).
Increasing the size of a company through acquisitions may bring the following benefits:
• Acceleration of growth;
• Risk diversification;
• Easier access to the capital market;
• Increase the value of the company making the company easier to be sold.
The external growth is a much simpler and faster solution than the organic growth. However, it remains necessary to consider and preside over some important topics, such as organizational issues related to aggregation across several companies, which if not properly addressed can lead to the crisis of the entire corporate structure.
This type of growth can also clash with the Italian and European antitrust law, due to the risk of “concentration”. These regulations, in fact, explicitly prevent concentrations which have as their object or effect the restriction or prevention of competition on a permanent basis. In these cases, in fact, the act that realizes the concentration (such as merger or acquisition) must be communicated to the competent national autorithies, which may possibly object to that concentration on these grounds.
From the moment of the choice of the target (company to be acquired) untill the moment of execution of the agreement, it is crucial to rely on specialized professionals in order to conduct the most appropriate investigations (so-called due diligence) as well as to negotiate and set the right corporate governance mechanisms to protect the growth prospects.
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