How to Buy a Company
There are two types of growth in the business world: growth you build and growth you buy. Today, I’m going to talk about the latter.
In the history of Rakuten we have made dozens of acquisitions. Some were big and drew headlines such as our acquisition of Canadian e-reading company Kobo. Many others were quite small – companies with little reputation outside their niche industries. But big or small, acquisitions are an important part of the Rakuten strategy. I see every acquisition not just as a way to make money, but as an opportunity.
When two companies enter into a merger and acquisition agreement, they make the most serious commitment to each other than the business world allows. They are agreeing to move forward as one. I know many in the M&A business see acquisition as purely a financial strategy. I view it as a way to begin a long and profitable relationship between companies and even between countries.
How to do it right:
- Look for cultural synergy. When we begin to talk to a potential acquisition, the first topic we explore is company culture. We talk about Rakuten “Shugi” – the mission, values and practice that define our corporate culture. We talk about everything that makes up the Rakuten “Way” from how we have embraced English as our corporate language to how all of us – from executives to the newest hires – clean up our workspaces ourselves every week. The culture fit is the foundation of any acquisition.
- Buy for tools. Many of our acquisitions come onto our radar because they have developed a key tool – software or other intellectual property, or expertise in an area outside our core. When we make that deal we are adding a tool to our kit that allows us all to perform at a higher level.
- Buy for new markets. Expansion into new markets is the goal of any global business. Building from the ground up in a new market takes time. Buying the right company in a new market can speed that entry with a built in set of customers.
Acquisitions can be complicated. The key to success is making the right moves at the outset. This sets the stage for a successful combination.
Photo: Yoshikazu Tsuno/AFP/Getty Images
Global TPM @ Meta | Member Board of Trustees, CoFounder @ Akama Fund | Regional Co-Chair Black@ Meta
11 年This is not how this is why. I'd like to see some of the practical mechanisms. Mergers, hostile takeovers, how do you raiser the funding? self financed? borrow? I hope there's more to come. Tell me about your acquisition of Kobo. that would make for an interesting read.
CEO at SINGO MINES
11 年good idear for entreprenuer
Motorista Carreteiro , Lorry Driver Truck , Condutor de Veículos PESADOS.
11 年Excellent growth in buying company.
President at REFLECTIVE DESIGN SYSTEM LLC
11 年Leadership, since of family,and development, strengthen the organization and its future goal. Growing a company can be in many way, external, internal according your financial strength and ambitions.
Program Management and Software Engineering Leader
11 年I'd add another point - Buy for growth. A larger company often can leverage its resources to have more explosive growth after acquiring a smaller target which might have limitations to maximize its potentials while operating alone. Cisco successfully did this in the 90's.