Business Growth By Acquisition

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Uploaded by on Aug 20, 2006

This short 6 minute video from The Business Doctor outlines why you should consider growing your business by Acquisition rather than just by organic methods.
If you need help in negotiating the Acquisition of a business contact www.thebusinessdoctor.com.au for help or some ideas.
Or visit my FREE business tips audio postcards at www.businessdoctornewsletter.com

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News & Politics

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  • likes, 3 dislikes

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Uploader Comments (jeff777711)

  • CEO only serves the stock holders employees are expendable

  • Although the CEO of any company is appointed by the Shareholders (Stock Holders in the USA) the CEO need to have a balanced view to protect the interests of all STAKE HOLDERS.

    One of the best tools that a CEO can use in regards to Dividends or Bonuses is to hold a certain amount in a Consolidated Account.

    This will allow dividends even when cash is tight. It also allows capital purchases when cash is tight.

    Regards

    Jeff (The Business Doctor)Miles

  • In other words, this is called Economies of Scale. You got all your point right, except that you cannot say that organic growth would not yield that same result. If done properly, organic growth could work better for you.

  • Kandy,

    Yes you are correct about it being Ecconomies of Scale, but in my experiance Acquisition will always give a far greater Turnover and Gross Profit level almost instantly. The challenge of acquisition lies in the existing managements ability to 'manage' the doubling of the business activity. I prefer organic growth as a measured way to grow but acquisition provides 'super profits' instantly and are very attractive to many business owners.

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All Comments (28)

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  • Expanding is not always an option for most businesses, but given the chance, a business owner would be crazy not to.

  • @BusinessDoctorSecret Implementation is probably the most critical aspect in realising value from M&A. However anything could go wrong along the before there is even a chance to implement.

  • @jeff777711 Can you please explain what under which heading in a Consolidated Account?

  • @GobalHoldingsLLC The company's management must make decisions in the best interests of shareholders. Management is thus an "agent" and takes decisions (and the responsibility) on behalf of the shareholders. This best interests gives rise to the managing of risks that could destroy value.

  • The CEO reports directly to the Chairman as his or her employer's representative = you are quite correct. But there are stakeholders that the CEO also needs to be mindfull of e.g. Employees and Customers.

    So it is a little like a Balancing act not to annoy any essential Stakeholder.

    There again, this is what you are paying for - to attract and keep a smart and effective CEO.

  • ceo owes reltionship to stock holders only

  • Expense cutting does not grow revenue = COGS is what you need to focus on. Increase COGS and you will absolutely grow the revenue easily. If your T/O is greater than $2mill then a solid 6 - 8% growth is possible. So again an acquisition is preferable for stronger growth.

  • Yes, please send me an email for further details.

    Regards

    The Business Doctor

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