Devising an acquisition strategy and being active in the M&A market has always been widely recognised as the most efficient way to increase the size of an organisation and obtain a greater market share. However, as the clouds from the covid-19 pandemic begin to clear, a new type of opportunity is emerging as an increasing number of organisations are seeking to explore the option of crossing industry sectors in order to adapt as we enter a new, post-COVID world.
In February 2021, EY conducted a survey and found that since the new year, the confidence of business owners has significantly increased and that there has been a shift from businesses trying to survive, to wanting to thrive. Within the midst of the pandemic, many owners had been forced to adapt their business models just to keep their heads above water, but they now believe those times are behind them and that there are new opportunities on which they can capitalise, even if this means repositioning across new sectors and borders in the exploration for new synergistic alliances. It is no new phenomenon for multinationals to diversify from their traditional product offerings, as industry convergence has historically driven innovation and changed the way in which we live. Famously, had computer giants Apple, not entered the telecommunications market to challenge Nokia, (that at the beginning of the new millennium, appeared untouchable) the likelihood is that the smartphone device may not have existed.
Today, the multi-billion-dollar EV company, Tesla, is a prime example of how a modern innovative business can disrupt markets in order to increase growth. Formerly, it was focussed purely on the automotive industry but has since expanded into solar power and energy storage solutions aimed at the residential market, and as such it has since experienced a 113% increase in share value within the past 12 months. It is believed that many businesses will opt to follow in Tesla’s footsteps and diversify in order to unlock new opportunities as confidence in the economy continues to increase and large businesses seek to acquire in areas where they are not currently active.
If you would like to learn more about how Translink IMA may be able to help you with succession planning or growth by acquisition, please do not hesitate to get in touch with one of our advisors via our website at IMA Corporate Finance.
Translink IMA is part of Translink Corporate Finance, an international M&A group with over 600 finance professionals located in 30 offices across the globe. Our offices have closed transactions in every industry and our sector expert groups include IT, SaaS, Healthcare, Food, Automotive, Industrials and Transport. We are focused on providing our clients with deeper insights into global developments and knowledge on targets and bidders in their respective markets.
References
Tesla – mission to accelerate the world’s transition to sustainable energy
Dealsuite – Across industry lines
EY – Will COVID-19 turbocharge M&A and transformation
