{"id":8813,"date":"2024-12-15T18:18:39","date_gmt":"2024-12-15T15:18:39","guid":{"rendered":"https:\/\/www.valuwit.com\/?p=8813"},"modified":"2025-01-13T14:21:05","modified_gmt":"2025-01-13T11:21:05","slug":"programmatic-ma-acquisition","status":"publish","type":"post","link":"https:\/\/www.valuwit.com\/ar\/programmatic-ma-acquisition\/","title":{"rendered":"Why Programmatic M&A is the Smart Way to Grow Your Business"},"content":{"rendered":"

The common image of a merger or an acquisition (M&A) deal is one where a nine-figure agreement is negotiated for months, surrounded by endless speculation, media buzz, and massive organizational shake-ups.\u00a0<\/span><\/p>\n

There\u2019s, however, another approach that is proving to be much more successful and safer than the headline-grabbing mega deals.<\/span><\/p>\n

A departure from traditional, one-off large deals, programmatic M&A\u2014or programmatic acquisition\u2014is an approach where a business acquires smaller players following a clearly set strategy.<\/span><\/p>\n

The evidence for programmatic M&A’s effectiveness is compelling. A comprehensive ten-year study by McKinsey & Company, analyzing the top 2,000 global companies with market capitalizations exceeding $2 billion, revealed that <\/span>59% of the top 100 companies<\/span><\/a> employed a programmatic acquisition strategy.\u00a0<\/span><\/p>\n

These programmatic acquirers didn’t just succeed \u2013 they excelled, achieving a median excess shareholder return of 2.1% and outperforming their peers by at least 20% in total shareholder returns.<\/span><\/p>\n

The study also shows that programmatic acquisition helped businesses <\/span>expand their portfolio by an average of 6.1% <\/span><\/a>in comparison to large M&A deals that averaged a portfolio expansion of 0.2%<\/span><\/p>\n

Yet, despite all the evidence in favor of programmatic acquisition, more than 50% of the companies in the McKinsey study have kept their focus on larger M&A deals over the past 20 years.<\/span><\/p>\n

This suggests a significant untapped opportunity for value creation through a programmatic acquisition strategy.<\/span><\/p>\n

4 Key Benefits of a Programmatic M&A Strategy<\/b><\/h2>\n

Unlike traditional M&A approaches that might focus on one or two transformational deals, programmatic acquirers typically complete several deals annually, each representing between 5-15% of their market capitalization.\u00a0<\/span><\/p>\n

Smaller acquisitions, when pursued as part of a deliberate and systematic M&A program, tend to yield higher returns over the long run with comparatively lower risk.\u00a0<\/span><\/p>\n

McKinsey\u2019s research paper explains, \u201cCompanies\u2019 ability to successfully manage these deals can be a central factor in their ability to withstand economic shocks.\u201d<\/span><\/p>\n

Read Also: 10 Steps to Developing an M&A Strategy<\/b><\/a><\/span><\/h4>\n

 <\/p>\n

1- Risk Mitigation\u00a0<\/b><\/h3>\n

Programmatic M&A helps minimize risks on several fronts, chief among which is portfolio diversification.<\/span><\/p>\n

By spreading investments across multiple smaller deals, companies reduce their exposure to any single transaction failure. This diversification helps mitigate both financial and operational risks, creating a more balanced growth portfolio.<\/span><\/p>\n

Furthermore, the continuous nature of programmatic acquisition reduces the pressure to time the market perfectly for any single deal.\u00a0<\/span><\/p>\n

Businesses can maintain a steady pace of acquisitions through different market cycles, adjusting their approach based on conditions.<\/span><\/p>\n

2- Accelerated Growth<\/b><\/h3>\n

Businesses can quickly enter new markets, acquire new technology, and expand their product portfolio within a calendar year through targeted programmatic acquisitions. This systematic approach often yields faster results than organic growth alone or a single larger acquisition.<\/span><\/p>\n

3- <\/b>Higher Value Creation<\/b><\/h3>\n

The McKinsey & Company research proved the higher shareholder returns of programmatic acquisition compared to companies that make occasional large deals or those that rarely engage in M&A.<\/span><\/p>\n

4- <\/b>Stay Ahead of Innovation<\/b><\/h3>\n

Acquiring companies with proven top talent and technological capabilities, allows your business to enhance its competitive edge.<\/span><\/p>\n

This is particularly valuable when internal R&D might take too long or cost too much.<\/span><\/p>\n

Read Also: 4 Ways to Calculate the Value of a Target Company<\/b><\/a><\/span><\/h4>\n

<\/h2>\n

3 Limitations to Consider<\/b><\/h2>\n

Maintaining a continuous deal pipeline<\/span> requires resources<\/b>, including dedicated teams, tools, and processes. This can be challenging for smaller organizations.\u00a0<\/span><\/p>\n

Integration Complexity<\/b> is another limitation that may face businesses during programmatic M&As. <\/span>Managing multiple integrations within a calendar year can overwhelm your business\u2019 operations.<\/span><\/p>\n

Frequent acquisitions can create challenges in maintaining <\/span>cultural cohesion<\/b> across the organization. Each acquired company brings its <\/span>own culture<\/span><\/a> and ways of working.<\/span><\/p>\n

Read Also: Retaining Employees During an M&A<\/b><\/a><\/span><\/h4>\n

 <\/p>\n

Programmatic M&A isn’t just another corporate buzzword, it’s a proven way to drive growth and create value. The numbers speak for themselves. While others stick to outdated approaches, you have the opportunity to join the ranks of top-performing companies that use programmatic acquisition to stay ahead.<\/span><\/p>\n

Your success will depend on commitment, clear direction, and building the right capabilities. But if you’re ready to take your growth strategy to the next level, programmatic M&A could be exactly what you’re looking for.<\/span><\/p>\n

Developing the right M&A strategy for your business is VALUWIT\u2019s key strength, <\/span>request a consultation <\/span><\/a>to explore your growth option.<\/span><\/p>","protected":false},"excerpt":{"rendered":"

The common image of a merger or an acquisition (M&A) deal is one where a nine-figure agreement is negotiated for months, surrounded by endless speculation, media buzz, and massive organizational shake-ups.\u00a0 There\u2019s, however, another approach that is proving to be much more successful and safer than the headline-grabbing mega deals. A departure from traditional, one-off […]<\/p>","protected":false},"author":1,"featured_media":8864,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[29],"tags":[],"class_list":["post-8813","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-english-posts"],"yoast_head":"\n4 Ways Programmatic M&As Helps Scale Your Business - 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