Advantages And Pitfalls of acquisition

Advantages
The benefits that come with a strategic acquisition of another company include:

• Adding value to the combined entity by eliminating redundancies and increasing overall revenues.
• Taking advantage of additional distribution channels that you can leverage more effectively with your own products and services.
• Acquiring existing technologies and business processes, which would otherwise be extremely expensive to develop on your own.
• Accessing talented managers and employees without the need to engage in an extensive search and hiring process.

Pitfalls
There are, however, significant pitfalls to avoid when considering an acquisition, including:

• Possible clashes between your corporate culture and that of the company you intend to buy.
• Apprehension among both your employees and those of the company you acquire. These employees may feel that their jobs may be in jeopardy during a consolidation (and their concerns may even be warranted).
• Potential increased debt on your balance sheet if you’re borrowing money to fund your acquisition, which could impact your ability to borrow additional funds for other purposes.