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Right time to acquire competitors

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Many industry segments in Australia are fragmented, and growth via merger or acquisition is a key option. Even ologopolistic markets offer the same opportunity.

At the moment, the economy is in good shape and SMO Strategic Marketing Outsourcing Pty Ltd believes it is a good time to merge. Inflation and interest rates are relatively stable, loan capital is arguably readily available and industry structures are ripe for transformation after a long period of little change.

Because major competitors appear to have consolidated their positions and have access to cash for defence, smaller players may have to get together to go forward on a sustainable viable competitive basis.

It is doubtful whether they can stand in the face of stronger larger competition and enjoy comparable margin rates in the foreseeable future.

It is debatable what steps can be taken quickly and at a reasonable cost to identify merger and acquisition opportunities in a market.

The first strategic step is to construct a market map.

This market mapping approach identifies the channels and route-to-market by segment and pinpoints which competitors have greater influence.

This company believes it's about identifying the potential value-add of bolting two organisations together to strengthen the overall value proposition and to release cost synergies.

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