For CEOs and board directors, managing risk is part and parcel of the corporate playbook. Yet, when it comes to M&As, some still gamble on a one-off 'Big Bang' acquisition, hoping to hit the jackpot. However, the high-stakes, all-in approach is more akin to Russian Roulette than to a calculated investment strategy.
Why Frequent M&As are a Safer Bet
Incremental Learning: With each smaller acquisition, your team gains valuable experience in due diligence, deal structuring, and negotiation. These learnings reduce risk in subsequent deals.
Pilot Testing: Think of each small acquisition as a ‘beta test’ for larger strategic moves. If one deal falls short, the lessons learned can guide future strategy, turning setbacks into setups for success.
Diversification: Like a well-balanced investment portfolio, a diversified acquisition approach spreads risk. Instead of sinking vast sums into one big gamble, allocate resources across multiple ventures to balance outcomes.
In conclusion, frequent and consistent M&A activity serves as an effective risk-mitigation tool.
Each acquisition becomes a stepping stone, each success a building block, solidifying your company's growth trajectory.
How do you manage risks in your M&A strategy?
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