Business owners often think that their aim is to be better than the competition. They want to get more customers and take over the market. And that’s fine, but it’s certainly not the only option. You can also buy out the competition.
This isn’t a blanket statement, however. You have to carefully consider the situation and decide if that is the best option for your company. The competition becomes an investment; you’re not just buying them to shut it down. You’re buying them to make your company better.
For instance, maybe they offer a very similar product to yours, but with a wrinkle you never considered. It is an upgrade. Buying them means you get the intellectual property that they already have, so you can use that design and capitalize on it.
One way that this happens is when a large company has a vast network and can move a lot of products, but the innovative new company, despite their advancements, simply isn’t there yet. Maybe you can sell a million units, but they’re only going to move 10,000 at most.
Buying them not only stops them before they get close to your level, but it sets you up to distribute this new, innovative product at vastly higher quantities. It may also be easier for you to make the products in the first place since you have a supply chain and the employee base to do it. You can invest the money up front because you know you can make it pay off in a way no one else could.
Mergers and buyouts can be complicated, and you must be sure you take all of the proper legal steps — such as securing the right to use their intellectual property after buying.