When Apple bought Dre Beats (Beats Electronics) for $3 billion it made the headlines. When Facebook bought Whatsapp for $19 billion it even sparked a little interest among those outside the technology sector. When Comcast bought Time Warner for $45 billion people were wide-eyed and open-mouthed at the sums of money flying around.
However, in the grand scheme of things, this year’s seemingly big deals are little more than molehills standing amongst mountainous deals that comfortably dwarf them. When two big companies become locked in an almighty acquisition arm wrestle, it takes huge amounts of money to sway the outcome one way or another.
And so, to illustrate this point, here is a look at the 10 biggest business acquisitions of all time:
10. Comcast bought AT&T Broadband from AT&T in July 2001 for $76.1 billion
9. Royal Dutch Shell bought Shell Trading and Transport in October 2004 for $80.1 billion
8. Exxon bought Mobil in December 1998 for $80.3 billion
7. AT&T bought Bell South in March 2006 for $83.1 billion
6. Pfizer bought Warner Lambert in November 1999 for $87.3 billion
5. Fortis, Banco Santander, and Royal Bank of Scotland bought ABN AMRO Holding in April 2007 for $100 billion
4. Shareholders bought Philip Morris International in August 2007 for $107.6 billion
3. Verizon Wireless bought Vodafone (45 per cent share in Verizon) in September 2013 for $130.1 billion
2. Vodafone bought Mannesmann in November 1999 for $185.1 billion
1. AOL bought Time Warner in January 2000 for $186.2 billion
Let’s review: considering that these 10 blockbuster deals date back over 15 years, it demonstrates just how rare it is that mergers and acquisitions on this scale take place. Furthermore, we can also see that oil and gas and telecommunications feature prominently on the list; this is, of course, reflective of the huge size of the global companies operating in these sectors.
Nevertheless, to return to the real, everyday world, regardless of the amount of money involved in a deal, the same due diligence and careful consideration needs to be applied to ensure the acquisition represents good value and a good opportunity for growth.
‘To stand on the shoulders of geniuses’ is often used in a derogatory tone, almost to imply laziness and corner cutting. In reality, it’s a smart approach – why break your back doing something that has already been done when the option might be there to simply capitalise on the groundwork carried out by others. That’s why inorganic growth through business acquisition can be so attractive and so effective.
On the other side of the coin – if you can prove that your business has a valuable product, service, asset, contact list or business model then you can expect to see the sizeable increase in the returns you get should you sell the business – that’s why it is always so important to have an exit strategy in mind from day one so you can focus on maximising value.
If you are a business owners, considering the sale of your business we offer a confidential free business valuation from our business transfer partners, get in touch for more information.
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