Clarify Your Strategy by Considering an Acquisition
The best organizations of all sizes have their eyes on potential acquisitions, even when an acquisition seems unlikely or unfamiliar, given the enterprise’s history.
That’s because they know that understanding why an acquisition would make sense actually clarifies their existing strategy.
More specifically, thinking through what strategic reason most justifies why the organization should consider an acquisition clarifies what is missing or needs to be strengthened in the existing strategy.
Here are the 10 Strategic Reasons Why an Enterprise Should Consider an Acquisition:
Market Strategy: to expand the existing product or service set to provide access to new markets and customers to drive growth
Market Share Strategy: to help the enterprise increase its market share quickly
Diversification Strategy: to diversify their product or service offerings to reduce risk
Technology Strategy: to provide new technology, patents, or skilled experts that are currently lacking
Strategic Assets Strategy: to quickly possess value resources such as intellectual property, branding, and distribution channels to strengthen the enterprise’s position
Economies of Scale Strategy: to merge operations to reduce costs, increase bargaining power with suppliers, or create shared infrastructure
Synergistic Strategy: to combine resources and capabilities to improve profitability
Geographic Strategy: to allow the enterprise to enter or expand in new geographic markets without the time and resources to do so organically
Talent Strategy: to bring in key talent and leadership to drive innovation and growth
Defensive Strategy: to prevent competitors from gaining an advantage or to consolidate their position
Ask the team that IF they were to consider an acquisition target, what would make the quarry most attractive? Which of the strategic reasons above has the most appeal and why?
If the team is most attracted to adding new products or services through acquisition, it suggests the existing set needs to be bolstered.
If the team finds acquiring new talent and leadership most alluring, it indicates the existing talent may need to be developed more aggressively. And so on.
The discussion to rethink the existing strategy catalyzed by this acquisition evaluation can prove highly instructive.
Stop leaving strategic thinking about acquisitions to large and financially powerful organizations. Use a discussion of acquisition to further clarify your organization’s existing strategy.
Good targets serve many purposes.
This perspective flips the acquisition narrative from being solely about expansion to serving as a strategic lens for self-assessment—a refreshing take. It’s a powerful exercise in uncovering organizational gaps while sparking intentional growth conversations. How have you seen companies best balance the tension between pursuing acquisitions for immediate gain versus long-term strategic alignment?
I’ve never thought about acquisitions this way before. It’s not just about growth or adding to the company—it’s a way to understand what you truly need for your company/yourself. Whether it’s talent, market share, or technology, asking these questions forces you to be honest about where you’re falling short. This mindset could help smaller organizations punch WELL above their weight. Definitely a strategy worth exploring. Thanks!