Why Acquiring Another Company Can Help Your Business
- Monday, 13 March 2017
In the construction industry, acquiring another company can help your business have a greater market reach, expand your skillset and technology tools, or it can simply help your company grow faster. If you are thinking of acquiring another company, being acquired or merging with another business, here are a few points to consider before moving forward.
According to PWC, there were 305 merger and acquisition deals in the construction industry worldwide in 2016 alone. Of course, this kind of business deals must be advantageous for both parties for the idea to be attractive in the first place. There are advantages and challenges that, though obvious, are easily ignored or forgotten when acquiring another company. Keep the following in mind:
Strengthen your company's position
Both companies become stronger and bigger of course. Regardless of it being an acquisition or a merger, the resulting company has more resources and assets. This can be a great way to attract bigger clients or projects, ones that you could not have approached prior to the acquisition or merger. For example, though in a different industry, the Netflix series "Mad Men" depicts a situation in which two small ad agencies cannot individually close a deal with Chevrolet. However, when both agencies decide to merge, Chevrolet reconsiders and decides to do business with them.
- The challenge:
In the same "Mad Men" agency merger example, once both agencies move into the same office space, company cultures and employee roles collide. The challenge here is to identify values and working culture priorities before deciding to move forward with a merger or acquisition. There needs to be a plan to integrate and adopt business values, as well as coming up with a comprehensive plan to identify and define employee roles and responsibilities. That way, the transition can go smoothly and effectively.
Acquire new talent
Many companies decide to acquire other ventures simply because of their talent pool. This becomes especially important for the construction industry because of the existing labor shortage.
- The challenge:
Just as the previous point, bringing in a large group of new employees challenges your working culture and can generate confusion about tasks and responsibilities. Make sure the incoming group is familiarized with your company's core values and working culture before finalizing the acquisition process. Also, make sure parent company employees serve as mentors and guides for incoming team members.
Achieve greater market reach
Perhaps your company only operates in a certain geographic region. If you want to expand your reach to other domestic or international markets, and acquisition can be the best way to achieve this. Since the acquired company is already in place, you don't have to go through the pain of "opening" new markets or learning about local talent and operational procedures from scratch.
- The challenge:
Local rules may be different from the ones you are used to playing with. Make sure you understand the implications of you conducting business in said city or country. When in doubt, you need to be able to trust local executives who are now part of your company.
Also, since your team is now larger and scattered, communication is more important than ever. Make sure teams are in constant communication with one another. Give them the ability to keep track of projects through your construction project management software and other tools.
Acquire new technologies
If you are thinking of catching up with the latest trends or getting ahead of them, then acquiring a company for their technology is one of the best ways to achieve this. For example, surveying drones are already more precise, efficient, fast and cost-effective than manned surveys. If you don't have employees or team members that can handle these technologies, you can either outsource this effort or acquire a drone company.
- The challenge:
Although you are acquiring the technology, make sure existing employees understand the concept and importance of this technology for your company and for their own well-being.