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Tabak Newsletter - May 2026

Growth by Acquisition

Many of the buyers on the Tabak database are existing business owners seeking to improve and/or grow their businesses. One of the most effective and immediate ways to up-size your business is to buy your competitor (i.e. business acquisition). This method can also be one of the most cost-effective ways of growing your business and securing new customers for your existing products/services and new products/services for your existing clients. For many New Zealand business owners, acquisition offers a faster, more strategic path to scale than organic growth alone.

The benefits of business acquisition extend well beyond revenue growth. 

By acquiring an existing business, you can: 

• Instantly increase market share and customer numbers
• Eliminate or reduce competition
• Acquire skilled staff and established systems
• Gain access to new locations, suppliers or distribution channels
• Improve purchasing power and operating efficiencies

The decision to buy a competitor, supplier or client may be made for strategic reasons, or the alternative is to grow your business slowly over time. With effort, you can improve existing systems to increase sales, thereby creating a larger, more profitable and valuable business. However, organic growth often takes years, while acquisition can deliver immediate results.

What Are the Three Acquisition Strategies?

1. Horizontal Acquisition
Buying a direct competitor to increase market share, remove competition and strengthen your position in the same industry.

2. Vertical Acquisition
Acquiring a supplier or customer to gain control over your supply chain, reduce costs and improve reliability.

3. Conglomerate or Diversification Acquisition
Purchasing a business in a different industry to diversify risk and open new revenue streams.

Each strategy should align with your long-term business objectives and growth plan.

Strategic Planning Before You Buy

Business acquisitions should occur as part of a strategic plan, not just because an opportunity is available. You should identify long and short-term objectives, desired personal, strategic and operational goals. Develop a profile of the type of business that would best suit your needs. It can be a good idea to discuss your ideas at an early stage with your professional advisors. Once you have made the decision to try and acquire a business, the next step is to search the market for one that is suitable and meets your criteria. This can be achieved through business sale websites e.g. www.nzbizbuysell.co.nz and www.trademe.co.nz. You may also review the listings of various business brokerages or even engage with one, so they can proactively work with you under a Buyers Mandate.

Growth by Business Acquisition: Building the Right Team

When looking to purchase an existing business it is prudent to pull together an “acquisition team”. This team should include your banker, accountant and lawyer. These advisors are important in helping get a good strategic fit and in reviewing and verifying all the relevant information about the business you are considering. The company’s reputation and the strength of its business relationships also need assessing but you will need the permission of the acquisition target before talking to existing customers, suppliers and vendors about their relationship with the business. 

The Five Key Components of the Acquisition Process

A successful acquisition typically follows five critical steps: 

1. Strategy and Target Identification
Define your acquisition objectives and identify suitable businesses that meet your profile.

2. Initial Evaluation
Assess strategic fit, market position, reputation and preliminary financial performance.

3. Due Diligence
Review balance sheets, income statements, cash flows and tax returns. These documents are key indicators of a business’s ability and will help highlight any underlying problems.

4. Valuation and Negotiation
Examine the asking price, expected returns and integration costs, and negotiate acceptable terms.

5. Integration and Implementation
Map how you will integrate the acquired business with your current operation, including systems, staff and culture.

You will also need to map the potential benefits and examine all key elements identified in your ideal business profile to confirm it is the right move to achieve your growth strategy.

In Summary

Business acquisition remains one of the most powerful growth strategies available to New Zealand business owners. When planned carefully and executed with expert advice, buying a competitor or complementary business can fast-track your growth, strengthen your market position and significantly increase long-term value.

My thanks to our friends at www.nzbizbuysell.co.nz whose article on business acquisitions has been mercilessly plagiarised above.

Damien Fahey; Partner
Tabak Business Sales, Tauranga