The power of two: merging with an equal to become stronger

In our previous blogs we explored the various exit options that are available to companies who are thinking of selling.

These options include selling to a larger LSP, or to a large brand that is not a LSP but could benefit from the added value that an LSP can offer, such as a large e-commerce retailer.

In this blog, we will explore another option available to companies looking to accelerate growth towards a successful exit, which is merging with an equal to become stronger, which is usually the road less travelled.

Oftentimes, a lot of acquisitions are presented as mergers, but in fact most of these deals involve a transaction between a buyer and a seller that have agreed terms, with the buyer taking a majority stake or total ownership.

So most of these “mergers” are actually acquisitions.

A true merger is when two similar entities join forces and even if they agree that one might retain a slight majority, or if they divide it in several parts, they actually agree on a framework that gives the parties that are merging the opportunity to create a balance in the executive roles.

And the best way to do that is normally according to the relevant strengths of the parties involved e.g. somebody that has been working on sales continues in that role.

For many people reading about big mergers with various players entering and exiting, it may seem like this big, epic story and they decide it’s not for them.

But for many smaller LSPs who are struggling with organic growth, the task of growing from, say, $1.5mn a year to $3mn a year, may seem like a Titanic effort.

For these companies, joining forces with another company that is similar or complementary, they can achieve this growth with immediate effect and then work together to create that double-digit growth that will perhaps achieve a faster exit strategy.

According to Olga Blasco, M&A Principal Partner at Lion People Global, a successful merger needs three things.

“You need to build trust. You need to share goals and values. And if I may say so, you need to leave the ego at the door, because it’s not always going to go the way you want it – it’s going to have to be by agreement and consensus,” Olga says.

“And I think that the reason why it’s the road less travelled is because in order to achieve this trust, shared values, shared goals and no ego trips, you need a high level of alignment at all levels – professional, personal and business.

“You need a lot of generosity on the table, an open mind, and you also need a level of maturity that there will be certain things that you will need to approach in a very different way.”

If you want to know more about this area, visit Lion People Global’s website where you can watch back our M&A Talks series of videos and fill out a questionnaire that entitles you to one hour’s free consultation on getting a LSP or language tech business ready for sale.