October 2025 Newsletter
Acquisitions for Growth - 7 Successful Strategies
Completing an acquisition and ensuring its success long-term is the magic formula that eludes too many companies. Private Equity firms make one large investment in a hub or portfolio company and then build tremendous value in that company by making multiple add-on acquisitions as their primary strategy.
The key is having the right team of advisors in place from the very beginning consisting of, 1) an experienced M&A advisory firm such as CEO Advisor, Inc. that will lead the acquisition initiative from start to finish, 2) a seasoned corporate/transaction attorney and 3) a CPA or tax advisor. The M&A advisor is the liaison between the CEO, attorney and tax advisor, and will advise you and work on the acquisition every step of the way to achieve results.
The M&A advisor also performs all of the planning by working closely with the CEO, (or Private Equity firm and their Portfolio Company), creating a list of target companies, contacting these companies multiple times and tracking all activities, requesting initial information, creating and negotiating the Letter of Intent, coordinating the Due Diligence process and assisting through the legal documents with the corporate/transaction attorney by negotiating business issues of the acquisition.
Acquisitions create value through one or several of the following 7 strategies:
The key is having the right team of advisors in place from the very beginning consisting of, 1) an experienced M&A advisory firm such as CEO Advisor, Inc. that will lead the acquisition initiative from start to finish, 2) a seasoned corporate/transaction attorney and 3) a CPA or tax advisor. The M&A advisor is the liaison between the CEO, attorney and tax advisor, and will advise you and work on the acquisition every step of the way to achieve results.
The M&A advisor also performs all of the planning by working closely with the CEO, (or Private Equity firm and their Portfolio Company), creating a list of target companies, contacting these companies multiple times and tracking all activities, requesting initial information, creating and negotiating the Letter of Intent, coordinating the Due Diligence process and assisting through the legal documents with the corporate/transaction attorney by negotiating business issues of the acquisition.
Acquisitions create value through one or several of the following 7 strategies:
- Accelerate and expand market access to new products and services
- Improve the performance of the acquired company by building value through efficiencies and economies of scale resulting in increased profits
- Eliminate competition and excess capacity from your industry
- Acquire management expertise or technologies more quickly or at a lower cost than if they were built in-house
- Create the infrastructure for scalability
- Use seller-financing to leverage your ability to make acquisitions at lower financing costs
- Build tremendous value in your company for an optimal future exit and sale of your business at higher EBITDA multiples
7 Acquisition Strategies
Your goal or strategic rationale for an acquisition should be very clear. The following is additional information on these seven strategies.
1. Accelerate and Expand Market Access to New Products and Services
Smaller companies with innovative products have challenges reaching the potential market for their products and services. IBM pursued a roll-up strategy in its software business between 2010 - 2013 when it acquired 43 companies. By pushing the products of these companies through IBM's global sales force, IBM estimated that it was able to accelerate the acquired companies' Revenues as much as 40% in the first two years after each acquisition.
2. Improve the Performance of the Acquired Company
Improving the performance and efficiency of the acquired company is one of the most common strategies to create value. When you acquire a company to improve sales, marketing and its products, as well as, reduce costs and expenses to improve Gross Profit Margins, cash flow, and Net Profit, you substantially increase shareholder value. Keep in mind that it is easier to improve the performance of a company with low Gross Profit Margins and low Net Profit Margins than that of a high Gross Profit Margin and high Net Profit Margin company, so buying an underperforming company at the right price and terms can be a big win.
3. Eliminate Competition and Excess Capacity From Your Industry
As industries mature they typically develop extensive competition and excess capacity. By eliminating competition you also gain market share, increase sales and even expand your products and services. Additionally, you can eliminate downward pricing pressure due to less competition and create the opportunity to increase your Gross Profit Margin company-wide.
4. Acquire Expertise or Technology Faster or at a Lower Cost
Technology companies, for example, acquire other companies that have strong management, expertise or technologies they need to enhance their own sales, marketing, products and services. They can acquire the technology more quickly than developing it themselves, avoid royalty payments on patented technologies, and keep the technology away from competitors. They can also gain valuable expertise in a cohesive team with far more efficiencies than hiring individuals.
5. Create the Infrastructure for Industry-specific ScalabilityCreating economies of scale are often a key source of value creation in mergers and acquisitions. Economies of scale can be important in creating value with purchasing power, infrastructure or other areas that can benefit from larger volumes. This can substantially increase Gross Profit Margins, Net Profit Margins and the value of the business.
By focusing on the types of acquisition strategies that have created value for acquirers in the past, CEOs (and Private Equity firms) utilize acquisitions to create substantial value for their owners and shareholders. Negotiations in M&A deals are extremely different from any other negotiations of the day-to-day business world and far more complex than buying or selling real estate. With the right buy-side M&A advisor like CEO Advisor, Inc., you will feel completely comfortable pursuing strategic, opportunistic acquisitions.
6. Use Bank or Seller Financing to Leverage Your Ability to Make Acquisitions at Lower Financing Costs
Using bank or seller financing is common place with smaller acquisitions and can benefit both the buyer and seller. Buyers want easy, lower cost financing, and many sellers want to spread out the payments using seller financing for the acquisition to lower their taxes and spread them out over three to five years.
7. Build Tremendous Value in Your Company for an Optimal Future Exit and Sale of Your Business
It is a known fact that size (Revenue) matters and a larger company will fetch a larger EBITDA multiple, and therefore a higher sale price when you ultimately sell your company. If you don’t have an Exit Strategy in place now, you should speak with an M&A advisor such as CEO Advisor, Inc. to start working on optimizing the value of your business today. CEO Advisor, Inc. is a hands-on M&A advisory firm with the expertise and experience to help you through this challenging and exciting acquisition process. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Your goal or strategic rationale for an acquisition should be very clear. The following is additional information on these seven strategies.
1. Accelerate and Expand Market Access to New Products and Services
Smaller companies with innovative products have challenges reaching the potential market for their products and services. IBM pursued a roll-up strategy in its software business between 2010 - 2013 when it acquired 43 companies. By pushing the products of these companies through IBM's global sales force, IBM estimated that it was able to accelerate the acquired companies' Revenues as much as 40% in the first two years after each acquisition.
2. Improve the Performance of the Acquired Company
Improving the performance and efficiency of the acquired company is one of the most common strategies to create value. When you acquire a company to improve sales, marketing and its products, as well as, reduce costs and expenses to improve Gross Profit Margins, cash flow, and Net Profit, you substantially increase shareholder value. Keep in mind that it is easier to improve the performance of a company with low Gross Profit Margins and low Net Profit Margins than that of a high Gross Profit Margin and high Net Profit Margin company, so buying an underperforming company at the right price and terms can be a big win.
3. Eliminate Competition and Excess Capacity From Your Industry
As industries mature they typically develop extensive competition and excess capacity. By eliminating competition you also gain market share, increase sales and even expand your products and services. Additionally, you can eliminate downward pricing pressure due to less competition and create the opportunity to increase your Gross Profit Margin company-wide.
4. Acquire Expertise or Technology Faster or at a Lower Cost
Technology companies, for example, acquire other companies that have strong management, expertise or technologies they need to enhance their own sales, marketing, products and services. They can acquire the technology more quickly than developing it themselves, avoid royalty payments on patented technologies, and keep the technology away from competitors. They can also gain valuable expertise in a cohesive team with far more efficiencies than hiring individuals.
5. Create the Infrastructure for Industry-specific ScalabilityCreating economies of scale are often a key source of value creation in mergers and acquisitions. Economies of scale can be important in creating value with purchasing power, infrastructure or other areas that can benefit from larger volumes. This can substantially increase Gross Profit Margins, Net Profit Margins and the value of the business.
By focusing on the types of acquisition strategies that have created value for acquirers in the past, CEOs (and Private Equity firms) utilize acquisitions to create substantial value for their owners and shareholders. Negotiations in M&A deals are extremely different from any other negotiations of the day-to-day business world and far more complex than buying or selling real estate. With the right buy-side M&A advisor like CEO Advisor, Inc., you will feel completely comfortable pursuing strategic, opportunistic acquisitions.
6. Use Bank or Seller Financing to Leverage Your Ability to Make Acquisitions at Lower Financing Costs
Using bank or seller financing is common place with smaller acquisitions and can benefit both the buyer and seller. Buyers want easy, lower cost financing, and many sellers want to spread out the payments using seller financing for the acquisition to lower their taxes and spread them out over three to five years.
7. Build Tremendous Value in Your Company for an Optimal Future Exit and Sale of Your Business
It is a known fact that size (Revenue) matters and a larger company will fetch a larger EBITDA multiple, and therefore a higher sale price when you ultimately sell your company. If you don’t have an Exit Strategy in place now, you should speak with an M&A advisor such as CEO Advisor, Inc. to start working on optimizing the value of your business today. CEO Advisor, Inc. is a hands-on M&A advisory firm with the expertise and experience to help you through this challenging and exciting acquisition process. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
5 Ways CEOs Can Improve Their Performance and Plan Their Exit
Continuous improvement is vital to performing optimally as a CEO. The best CEOs make time for it, because they see it as an investment in themselves and their company that will pay off in real dollars now and in the near future. So what specifically can you do as a CEO to improve your skills and performance?
Here are 5 ways to improve performance:
Here are 5 ways to improve performance:
- Attend a Training Program To Fill Your Gap in Expertise - I have given many seminars on excelling at the CEO position. The biggest excuse I hear from CEOs for not attending is that they don't have time. From my experience the CEOs who do attend are typically the ones who are already better than most. Because of this, they know how to make time to improve their skills that ultimately improve your company. If you think you don't have time to get better at your job, then you are not doing your job properly. Choose the one area where you need the most help, and seek the help you need.
- Meet with Wise People - As a CEO it is part of your job to find people from outside your company who can bring knowledge and experience to bear on your challenges and goals. Make an effort to get to know people in your community who have relevant experience. Seek out the other leaders in your industry to establish relationships. Or contact a proven business advisor that will commit real time to working with you to grow and plan your ultimate exit strategy.
- Study Yourself - Learning about yourself, how you think and react, is critical to developing as a CEO and overcoming your internal biases. Bullet point what you are an expert in, what you have satisfactory knowledge in, and what are not your areas of expertise. Be honest about your gaps of knowledge, and the areas of expertise you need help. A mergers and acquisitions and business advisor that will work with you and mentor you, while helping your business grow, is priceless.
- Gather Feedback - If you are not getting feedback about your performance, then you have a problem. It is not enough to just ask for feedback and hope it comes to you. You should actively solicit feedback both from your employees, as well as, your Board or outside advisors. Getting feedback from employees will often require an anonymous feedback mechanism or third-party gatherer. Feedback from your advisors should be both informal and formal, as well as, on a regular weekly schedule.
- Seek Out Advisors - Reach out to those who have gone before you to gain from their expertise and experience. Prior to performing mergers and acquisitions advisory services as President of CEO Advisor, Inc., I was the founder and CEO of a software company that I funded, grew and sold to a NASDAQ company in 2003. The CEO job is unique, so make sure you have someone in your circle that has been in the chair and knows the challenges of the job. Avoiding lost time and missteps converts to big dollars in your pocket and propels your company forward with greater value.
CEO Advisor, Inc. specializes in mergers and acquisitions services - both buy-side and sell-side - and advising on all aspects of growth for small and mid-size businesses. Our mission is to grow your business to the next level, making acquisitions to accelerate growth, and to advise you through the ultimate sale of your company.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Copyright © 2025 CEO Advisor, Inc. All rights reserved.