The first and foremost M&A wave hit the world of business in the late 19th century. And the ball hasn’t stopped rolling since then. According to a study, worldwide acquisition and merger transactions accounted for $2.2 trillion — that too in just the first half of 2022.

Strategic acquisitions are ideal for businesses that want to start exploring an entirely new industry or market, acquire specific talent resources, expand the business’s product line, or increase market share and access to expanding economies. They also create buzz, increase profits, and increase brands’ valuation. However, just about 10-30% of the acquisitions succeed.

Therefore, it is vital to understand a host of things while committing to an M&A deal. This begs the question – How do successful acquisitions happen, and what do they do differently?

To answer that, let’s look at three companies that have sworn by their acquisition-led growth and what they do right. Here is a deep dive into the same.

Yes, organic growth strategies can also help you achieve all that, but it won’t happen overnight. It could take years of constant effort to double your company’s evaluation.

Speaking of the current scenario, merger and acquisition (M&A) has emerged as a trending approach to business growth, helping businesses in the US expand their revenue multi-fold. To quantify the same, M&A deals closed at a whooping market value of 2.6 trillion USD in 2021. India and UK M&A markets have also grown to an evaluation of $130.3 billion and £4.5 billion in 2022, respectively.

Global Giants and Their M&A Portfolio

Google Acquired YouTube and Android

Google, more than most, is dedicated to a trial-and-error method across strategic functions. And that reflects in their acquisition strategy. Since it took the center stage, the company has acquired over 200 companies. This approach started way back in 2001 with the first acquisition of Deja News.

However, its most successful acquisitions have been Android (2005) and YouTube (2006). After the acquisition and its subsequent growth under the flagship of Google, Android holds over 70% of the entire mobile OS market. How did this benefit Google? Google integrated most of its applications with the android smartphones interface. This led to the massive growth of google applications and drove the ad business sharply forward when smartphones became ubiquitous.

As for YouTube, the deal was somewhere around $1.6 billion. As it stands, YouTube has now become one of the leading video-sharing platforms, with creators joining in from all over the world. The strategic planning of Google has helped YouTube to rise beyond measure, with 2022’s second quarter turnover amounting to $7.3 billion. Google’s strategy has been simple — acquiring all the resources to demand premium prices and show market supremacy across categories, including categories that don’t even exist yet!

Facebook Acquired Instagram and WhatsApp

Facebook’s acquisition of Instagram and WhatsApp has only led to a dominant one-way growth in the user content creation market. Instagram is reportedly accruing higher ROI every year. According to an analysis, the revenue of Instagram was $47.6 billion in 2021 — accounting for 44% of the total revenue of Meta Platforms.

The acquisition has definitely proved to be a beneficial bet for Facebook (now Meta) despite Instagram working as a separate entity. The younger audience demographic that gravitated away from traditional Facebook still remained within the group’s umbrella due to their buying into the “insta” craze. That’s an acquisition strategy designed to fill a gap in an existing portfolio and create a defensible position in a new area altogether.

WhatsApp started as a safe and simple messaging platform back in 2009 and was acquired in 2014. Since then, WhatsApp has seen tremendous growth, with many features added over years. The primary reasons for this acquisition were to tap into the mobile communication market, expand reach in developing markets, and accommodate the proliferating user base. Although WhatsApp doesn’t yet contribute as highly as Instagram in terms of revenue, it’s far ahead of the competition in terms of capturing the messaging market.

Walmart Acquired Flipkart

Walmart is one of the most popular chains of hypermarkets in America. Its acquisition of Flipkart was a superb move in the eCommerce sector, valued at over $16 billion. But why did Walmart buy an India-based eCommerce platform? In simple words, to hold a share in the exploding current eCommerce market of India.

In this press release, the CEO and President of Walmart Doug McMillon, said, “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of eCommerce in the market.”

The deal has a futuristic edge and approach to it, and although the stock price of Walmart fell after the acquisition, it has turned out well in the long run, with the acquisition value doubling to $37.6 billion. It has led to the addition of online and brick-and-mortar shop consumers, making it a whole new business trajectory for Walmart and Flipkart, both in India and overseas.

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