Inorganic growth can be an incredibly powerful tool in helping companies achieve rapid growth and value. 

Organizations can choose to grow inorganically in several ways, including acquisitions, partnerships, and strategic alliances.

But ensuring that these approaches are successful requires preparation and precision.

I have worked on more than 200 acquisition integrations from the go-to-market perspective and dozens of partnerships and strategic alliances, resulting in a lot of hard-won lessons. I have seen, firsthand, how the right acquisition and the right partners can take businesses to heights never thought possible. Recently, I had the opportunity to share these learnings as a guest on the SBE Podcast with Brian Moran.

Here are some of the highlights of our discussion:

What You Should Know About Acquisitions, Partnerships & Strategic Alliances

Acquisitions are the most common type of inorganic growth and can be done to gain market share, plug a gap in your service or product offerings, or acquire intellectual property (IP) that will become part of your offering in the future. When a company acquires another company, it is essentially buying its assets, including its employees, customers, and intellectual property. This can be a quick and effective way to grow a business, but it can also be expensive and risky. It is important to carefully consider the target company’s financial health, its competitive position, and its cultural fit before acquiring the business.

Partnerships can be another valuable way for small and midsize companies to grow their businesses. By partnering with a larger company, companies can gain access to new markets, new technologies, and new resources while reducing costs and risks. When choosing a partner, it is important to consider the partner’s reputation, its financial strength, and its strategic fit. Most of the time, partnerships are transactional in nature, many times structured as sales referral mechanisms or around product development.

Strategic alliances are like partnerships, but they are typically more formal, integrated and long-term. Alliances typically involve working collaboratively (e.g., co-sell, co-fulfill, or co-develop). When choosing a strategic partner, it is important to consider the partner’s reputation, its financial strength, its strategic fit, and its commitment to the alliance.

How To Choose the Type of Inorganic Growth That’s Best for You

When you’re deciding which inorganic growth strategy to pursue, start with your business strategy. Where do you want to grow? What does successful growth look like for you beyond revenue?

Then look at options to get there. This often goes to the classic build-buy-partner-release model. You can build your way there alone, you can buy a solution like another company, you can partner to get there which may also be an alliance, or you can release it all and decide to do something else.

Think about what’s important to you and what your values and principles are. Is taking care of your employees who’ve been with you for years your top priority? Do you want to crank up the value so you can sell your company in the near term? Is cultural fit important? Also consider the financial strength of any company you may acquire – if you buy then you buy everything including their debts, contractual obligations as well as their revenue streams.

Post-Acquisition, Time to Integrate

Once a company has acquired another company, smooth integration is mission critical. This can be a complex and challenging process, but it is essential for ensuring the success of the acquisition. Integration typically involves combining the two companies’ operations, systems, and cultures. It is important to communicate openly with employees during the integration process and to provide them with ongoing support.

Go-to-market usually happens after the deal closes, increasing the urgency and importance of providing great customer service as soon as you are able to talk about the deal publicly. Every customer will worry that you’ll be too distracted to support them, so every customer becomes a retention risk – you have to get ahead of that! (You can learn more about our acquisition integration methodology.)

Measuring Success

Of course, you want to ensure that you determine the success of your inorganic growth endeavors. To do so, return to your strategy and ask yourself, “If this works, what will be true?” And remember, not everything moves at the same speed so you may see some costs go up in the short term that result in faster revenue growth shortly thereafter.

Future Thoughts

I believe that inorganic growth will be a popular route for small and midsize companies moving forward. Given the fluid state of the economy in many sectors, many companies are looking to acquire or be acquired. In addition, many companies are looking for partnerships and alliances to spread out their risk. Just remember, as valuable as inorganic growth can be, success doesn’t happen overnight. But with diligence, time, and effort, companies can begin to see the payoff.

To listen to the podcast in full, please visit: https://blubrry.com/smallbusinessedge/104656316/inorganic-growth-for-entrepreneurs-my-conversation-with-katrina-klier.

— Katrina Klier