Assess your next acquisition’s growth potential

There are numerous reasons why you may wish to acquire a new business; from wanting to take over a larger market share, to diversifying your product or service range, or simply to boost your profit margins, the options and opportunities are endless. However, this does not mean that any old business is worthy of acquisition. Nowadays, it’s imperative that a strategic decision is made prior to purchase to ensure compatibility with your existing company, and that there is room for growth in the years to come.

But how do you assess that growth potential? We’ve taken a closer look at what needs to be done to examine a company’s strengths and weaknesses, and how to measure its current performance for the sake of assessing long-term, sustainable growth.

Take a look at demand

Knowing the customer base of your potential acquisition is vital to evaluating its growth potential. Understanding the customers’ demographic, economic behaviour and social practices will provide you with the research needed to learn what aspects of the business you ought to capitalise on, and what opportunities are presently unexploited that you could take advantage of. This kind of research will help you devise further strategies required to boost your growth; you can turn to different social media platforms, opening hours, and even come up with new offers that could tempt an entirely new market, but none of this can be done without researching the demand for the business in the first place. Only then will you be able to look at potential growth avenues going forward.

Take a look at the competition

Naturally, you will need to assess your competitors in order to evaluate the risk they present to you and your acquisitive strategy. For your acquisition to have any worth, your competitors’ strategies must be analysed to understand its merits and weaknesses, and where in particular it is lacking. Once a niche market or service is identified, your acquisition and strategy development can be devised to cater to previously underserved consumers, allowing your business as a whole to make gains. After all, doing exactly what your competitors are doing will not yield the results you so desire, and thus is important to pick their strategies apart with a fine-tooth comb to understand and learn from it.

Take a look at complementary markets

It might seem obvious, but looking at businesses to boost your existing company’s portfolio is one way to assess growth potential. This method allows you to create one holistic brand as a whole that consumers may prefer for the sake of convenience, and will allow you to utilise the resources from either side to bolster production and efficiency as a result. In this case, it is vital that you assess the compatibility and demand of the acquisition, and look in-depth as to whether the business you wish to purchase will align with your current company’s values and goals. Only once the two businesses are thought to go hand-in-hand can the untapped opportunities for growth be evaluated.

Take a look at the business model

Researching customer and market behaviour is vital to understanding how your business model is working in its current environment, and how an acquisition may also perform after purchase. Consider if your target market is being fully addressed, if enough (or the right) technology is being used to draw in the most traction, or if any additional services can be offered to tempt new consumers towards your brand. Perhaps marketing strategies need to be altered, or new goals need to be devised altogether. Taking a look internally at your own business model and that of your potential acquisition will allow you to see what avenues for growth can be explored, and therefore how revenue can be maximised.

Research is keyband will pave the way to helping you assess your next business’s growth potential.