Why are buyouts a good thing for new businesses?
In: Economics
Some of the time a new business will have something that sets it apart and puts it on the path for growth. It might have a new technique, special technology, a different strategy, or just a recognized name that gives it the potential to do a lot more business.
However new businesses tend to lack a lot of other stuff. Excess money for example, expertise in various areas like accounting, logistics, personnel, marketing, etc. Maybe they could acquire those things but it would be a difficult, time consuming, and risky process. Their potential for growth might be a limited window of opportunity and doing all that may even be too slow.
By being bought out a bigger company with all or most of those missing pieces can turn the small business into its greatest potential. The owners in turn get to cash in on their business immediately and perhaps even when it is the most valuable it could be under their guidance.
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