Business Acquisitions: Acquisition Strategy as a Growth Engine

Business Acquisitions: Acquisition Strategy as a Growth Engine

A clear acquisition strategy is essential for companies looking to grow through M&A. A well-structured strategy not only defines how the acquisition process should be executed, but also ensures that every deal aligns with long-term business goals.

This article outlines the purpose of an acquisition strategy, the key components to include, and how to implement it effectively.

The purpose of an acquisition strategy

The primary goal of an acquisition strategy is to define why the company wants to grow through acquisitions and how this supports long-term objectives. Common aims include expanding market share, entering new geographies, diversifying product lines, or accessing new technologies.

A clearly defined strategy helps management focus time and resources on the right segments, targets, and opportunities that best fit the company’s vision.

Key elements of an acquisition strategy

• Purpose – Define why acquisitions are part of the growth plan and how they support the company’s long-term objectives.
• Acquisition criteria – Set clear parameters for evaluating targets, including financial (e.g., revenue, profitability) and strategic (e.g., market position, geography, technology).
• Market analysis – Map industry trends and competitor dynamics to identify attractive opportunities.
• Target screening – Build and prioritize a target list by assessing which companies best meet the established criteria.
• Internal processes – Establish clear roles, responsibilities, and standardized procedures for due diligence, decision-making, and integration planning.
• Follow-up – Define evaluation criteria to measure acquisition performance and apply lessons learned to future deals.

Implementing the strategy

Developing and executing an acquisition strategy requires structured work and collaboration across the organization. Key steps include:

1. Strategic planning – Analyze the market, assess internal strengths and weaknesses, and define long-term objectives.
2. Involving key personnel – Engage stakeholders across functions to ensure broad alignment and shared ownership of the strategy.
3. Developing acquisition criteria – Define measurable financial, strategic, operational, and geographic benchmarks (e.g., EBITDA margin >10%, strong market position, IP rights, or presence in specific regions).
4. Conducting market analysis – Use internal and external resources to identify trends, competitors, and growth opportunities.
5. Screening targets – Create and prioritize a target list based on how well companies fit the acquisition criteria.
6. Building internal processes – Develop templates and frameworks for decision-making, due diligence, integration, and communication to ensure consistency and efficiency.

The benefits of a clear strategy

A well-formulated acquisition strategy provides direction, reduces risk, and maximizes value creation. It ensures that acquisitions are aligned with strategic priorities, improves execution, and increases the likelihood of long-term success.

Types of acquisitions

Depending on the objective, acquisitions can be structured in different ways:

• Share acquisition – Purchasing the shares of a company, thereby assuming ownership of all its assets, liabilities, rights, and obligations.
• Asset acquisition – Purchasing specific assets and liabilities (e.g., a business unit, brand, or technology) instead of shares, often to avoid unwanted obligations.

Financing acquisitions

Acquisitions can be financed through different structures depending on the company’s financial position and objectives, such as:

• Equity – Using retained earnings or issuing new shares.
• Debt – Raising bank loans or other credit facilities.
• Mezzanine financing – A hybrid form combining debt and equity.

Conclusion

Formulating a clear acquisition strategy is a critical first step for companies seeking growth through M&A. By defining objectives, setting clear criteria, conducting market analysis, and building strong internal processes, companies can ensure that acquisitions support their long-term goals and create sustainable value.

At FLB Partners, we support clients throughout the entire acquisition journey — from strategy and target screening to execution and integration. Contact us today to learn how we can help your company develop and implement an effective acquisition strategy.