In my past two posts, I’ve talked about organic growth and growing through operational improvements. Today, I’ll address the third primary pathway to growth: acquisitions.
Acquisitions are usually the fastest way to grow, as they provide a pathway to increased market share that may otherwise take years to reach. However, not all acquisitions lead to success. To get it right, the purchase or investment must be a strategic fit, which largely determines whether it will be a valuable expansion or a costly misstep.
As my good friend and founder of Purpose Equity, Dan D’Alberto says, “The transaction is important, and getting the right price is a big part of the equation—but it’s not the most important part. That’s why the values-driven business owners we partner with care about people first.”
Why are people so important? Because they dictate the commitment to the vision, and core values, which drive the culture—and cultures must be aligned for acquisitions to be beneficial, regardless of the numbers. We hear a great deal about culture these days, but culture is really nothing more than the behavior of leaders. That’s why if the leaders of the two companies (the buyer and the seller) don’t agree on how the company should be run, and how employees and customers should be treated, chances are, the acquisition will be a slog at best.
So how do we ensure a cultural fit? We do it by agreeing on core values to the point that we are willing to hire and fire based on the mutual commitment to those values—which is an integral component of an EOS™-run business. Once the alignment of values is assured, a good strategic match must also complement the strengths of the buyer and the seller—filling gaps in expertise, customer base, technology, or capabilities, and we also learn all of this in due diligence.
Needless to say, due diligence isn’t just about analyzing financials; it’s about asking the right questions: Do the company’s values align with ours? Will the cultures blend or clash? Does this acquisition enhance our existing strengths or create new challenges? The best acquisitions are those that feel like a natural extension of our business rather than a forced expansion. If it’s a natural extension, it can redefine what’s possible, providing accelerated growth.
Dan D’Alberto often quotes J.I. Packer, who said “Wisdom is the power to see, and the inclination to choose, the best and highest goal, together with the surest means of attaining it.” Every acquisition takes that kind of wisdom, giving us assurance we can attain our best and highest goals. Have you considered acquisitions as part of your growth strategy? And what steps do you take to ensure a strategic fit? Drop a comment below to share you acquisition story.