How an Effective M&A Strategy Can Reduce Risk, Strengthen Market Position, and Accelerate Growth

After years of uncertainty, the market for mergers and acquisitions (M&A) is surging. A recent 2025 report from Deloitte found that dealmaker optimism is at its highest level since before the COVID-19 pandemic, showing that more companies are returning to acquisitions to drive growth. 

For decades, companies both large and small have used M&A strategies to break through growth ceilings, acquire new technology, and expand their customer base. While the process has its risks, a successful acquisition remains one of the most effective ways to reshape a company’s future, delivering benefits on a scale that few other strategies can match. 

The Growth Benefits of M&A

While the inexperienced might believe otherwise, M&A isn’t as simple as signing a paper and watching your profits explode. Building an effective strategy takes time, and to truly leverage acquisitions for growth, your approach must be multifaceted and specifically designed to fit your unique situation. This means accounting for key variables like your specific industry, the current market conditions, and your company’s long-term goals. Understanding the distinct benefits M&A can offer is the first step to building that custom strategy.

Benefit #1: Market Presence Expansion

A strong market presence means your brand commands both recognition and consumer trust, compelling customers to choose your products and services over the competition. This presence is typically measured through several key metrics, such as:

• Net Promoter Score (NPS) to gauge customer loyalty
• Share of Voice (SOV) to track your visibility against competitors
• Brand Awareness and Recall Surveys to measure recognition directly 

While achieving the global recognition of corporate monoliths like Coca-Cola or McDonald’s is rare, establishing your company as the trusted leader within a specific industry or region is an achievable goal with a well-crafted M&A strategy. Strategic acquisitions give a company instant access to new customers, proven products, and entirely new geographic or demographic markets.

A classic example is the 2017 acquisition of Whole Foods by Amazon. With this single move, Amazon added hundreds of physical stores to its portfolio, inherited an established, loyal customer base, and acquired invaluable data on brick-and-mortar shopping habits. This helped them establish the type of market presence that would have taken years, if not decades, to build organically. 

Benefit #2: Achievement of Economies of Scale 

Economies of scale, or the cost advantages companies gain by increasing their operational size, are especially impactful in high-fixed-cost industries like manufacturing, pharmaceuticals, and software development. An M&A strategy is often the fastest way to achieve these efficiencies, which typically drive down the cost-per-unit by:

• Increasing production output with new facilities
• Consolidating operational processes like accounting or HR
• Gaining greater purchasing power for raw materials

This allows companies to increase output and boost profit margins simultaneously. For example, take a successful craft brewery that has recently acquired a small regional competitor. It would immediately gain increased production capacity, a new distribution network, and the ability to purchase raw materials like hops and malt in larger quantities at a lower price. In short, the acquisition would allow the brewery to produce more for less, directly boosting its profitability.

A famous, large-scale example is the 2017 merger of Dow Chemical and DuPont. By combining their companies, these two chemical giants were able to share their extensive R&D resources, consolidate their global distribution and supplier networks, and use their increased size to negotiate better pricing on raw materials. This positioned the new entity, DowDuPont (and its eventual successor companies), to be far more competitive than either company could be separately. 

Benefit #3: Acquisition of Technology and Intellectual Property

In a market driven by innovation, a company’s technology and intellectual property (IP) are often its most valuable assets. Acquiring a business with emerging tech or valuable IP is a critical strategic move that can help you:

• Gain valuable patents, copyrights, or proprietary algorithms
• Integrate new, proven features into your existing products
• Leapfrog competitors who are still in the R&D phase
• Onboard entire teams of specialized engineering and research talent
  

A prime example is IBM’s $34 billion acquisition of Red Hat in 2019. The purchase gave IBM immediate access to Red Hat’s market-leading open hybrid cloud technologies and its sizable portfolio of trusted open-source software, creating a significant new revenue stream. With this single acquisition, IBM repositioned itself as a dominant force in the hybrid cloud market, a move that would have been nearly impossible to achieve through internal development alone.

Benefit #4: Increased Diversification

Diversification through M&A is an essential risk mitigation tactic. Expanding into new markets or product lines allows companies to reduce their dependence on a single source of revenue, which protects them from downturns in any one sector. This makes their business more resilient by:

• Adding stable, predictable revenue streams to the portfolio
• Providing access to new markets with long-term growth potential
• Balancing a product lineup with counter-cyclical or non-seasonal offerings
• Capturing entirely new customer demographics

Perhaps no company exemplifies aggressive diversification through M&A better than Amazon. What began as an online bookseller grew into a global giant by systematically acquiring companies in completely different sectors. Through these acquisitions, Amazon has expanded into groceries (Whole Foods), video game streaming (Twitch), smart home technology (Ring), online pharmaceuticals (PillPack), and film and television (MGM Studios). Each acquisition was a strategic move to diversify Amazon’s portfolio, capture new customers, and build the company into the resilient, multi-faceted business empire it is today.