Several paths to growth
Corporate action can play a key role in this drive to diversify and grow. Mergers and acquisitions, for example, have become a successful business strategy for companies looking to gain new territories, grow revenue lines, diversify their customer base, increase their operating margins or acquire new technologies and skill sets. Management buyouts are also effective. In fact, research undertaken by the Business Development Bank of Canada indicates that the success rate of a management buyout is significantly higher than that of a third-party acquisition. This is because the existing internal leaders tend to have a deeper understanding of the business and how to run it, so the transition is smoother and faster, with less learning time and a lesser impact on employees, customers and suppliers.