Implement Buy & Build Strategy

The Buy & Build strategy requires many resources, not only financial, but also in terms of time and effort, and will trigger many changes in the organization, therefore you must have an answer to these two questions before engaging in such a complex road.

You should consider at least two reasons when deciding for a Buy & Build strategy. On one hand, you may want to solve a business growth problem: the business is not scaling fast enough, and acquiring one or maybe more business will help you grow fast. On the other hand, if you act in a fragmented market, with many small players, combining several smaller players, maybe with complementary portfolios or client base will allow you to transform in an important player, to make a stand towards competition.

Like at the beginning of any transformation program, it is important to understand what are the requirements from the strategy, and identify the issues to be solved. There are at least three key stakeholder categories: shareholders, management and employees, and you should understand the impact the strategy will have to each category.

You must revisit what you offer (portfolio) to identify synergies with targeted business, how you do things today (processes and IT infrastructure) and check if they will still support your business during the strategy execution).

You should be aware that the Buy & Build strategy requires that the company is not dependent on the founders (see Independence from the founders for more details). New businesses will come with their own culture, processes, decision making and, in general with own complexity, which will most likely be beyond the “management bandwidth” of the existing team.

Unless you’ve been through a similar experience in the past, you will need help in both preparation and understanding of what will come, but also in execution.

If you reach this point of asking questions, it means you took the decision to do it.

This means finding solutions to the issues previously discovered, plan and execute the resulted transformation plan.

At the same time, define in more details the strategy, especially how your new business should look like in terms of positioning in the market, offering to the clients. You must also decide on the targeted business profiles you are looking for (e.g. size, portfolio, position in the market).

You will need specialized help on strategy execution. You should contract an M&A agent that will support you through the entire acquisition process (by selecting and contacting potential business targets, evaluating them during the due diligence, etc.).

Once the acquisition of a company is done, you will start the process of integrating it in your organization. You could visit Post M&A Integration for more details on the challenges to be faced after the transaction is closed.