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Driving Business Growth with Incremental Acquisitions

In an increasingly volatile European market, businesses are moving away from traditional large-scale, high-stakes transactions and gravitating toward smaller, incremental acquisitions. This approach, often described as “buy and build,” offers a level of strategic flexibility that can be critical in uncertain times. 

Rather than committing massive resources to a single, transformative deal, companies are instead opting to accumulate value through a series of carefully selected, smaller-scale purchases. This measured strategy enables them to respond to evolving market conditions, mitigate risk, and secure a more sustainable growth trajectory.

A Rising Trend: The Buy-and-Build Approach

The decline in headline-grabbing mega-deals across Europe has created an environment much more conducive to small and mid-sized acquisitions. 

As such, buyers seeking to strengthen their market position are shifting their focus toward adding “bolt-on” targets: smaller firms that complement or enhance existing operations. 

For instance, a manufacturing group might acquire a specialized supplier to improve its production chain, or a technology firm may bring on a niche software provider to broaden its product suite. These incremental moves allow companies to scale up in manageable increments, carefully adjusting their strategies as needed.

A key advantage of this buy-and-build methodology is that it offers a balanced blend of caution and ambition. Instead of committing large sums of capital upfront, businesses can gradually expand their reach, capabilities, and customer bases. This agility not only helps control costs but also capitalizes on a period when motivated sellers are seeking exit opportunities. Firms that embrace incremental growth may find themselves well-positioned to outpace competitors who remain committed to more traditional, large-scale acquisitions.

Market Forces Shaping the Landscape

Several macroeconomic factors contribute to the rise of incremental acquisitions. 

Persistently uncertain market conditions, driven by geopolitical shifts, regulatory changes, and supply chain disruptions, can prompt businesses to look for ways to remain flexible. Climbing interest rates and fluctuating borrowing costs also influence acquisition strategies. 

By choosing smaller deals, businesses reduce their exposure to costly financing arrangements and maintain the optionality to pause or redirect their efforts as conditions change.

In addition, the changing regulatory environment across the European Union encourages a more surgical approach to M&A activity. Buyers are increasingly mindful of antitrust considerations and compliance requirements, and executing a series of smaller deals can streamline regulatory approvals and mitigate legal complications. 

Over time, this strategy can result in a well-rounded portfolio that offers resilience against market headwinds, while still unlocking new growth avenues.

Leveraging Economies of Scale in Challenging Conditions

Incremental acquisitions are not just about controlled risk-taking; they also enable companies to gain economies of scale over time. By steadily adding assets that fit their strategic vision, businesses can optimize operations, reduce overhead costs, and improve purchasing power. 

For example, a retail chain acquiring several smaller boutique brands can combine administrative functions, negotiate better deals with suppliers, and diversify its customer base. This step-by-step approach ensures that growth is scalable and sustainable, helping firms weather unexpected market shifts and maintain a competitive edge.

Opportunities for Sellers: Meeting New Buyer Expectations

On the sell side, the rise of incremental acquisitions creates opportunities for owners looking to exit. In this environment, buyers focus intently on the quality, transparency, and readiness of potential targets. 

Sellers who present stable financials, well-documented operations, and thoughtful exit plans can stand out and potentially command favourable valuations. Far from a buyers-only market, the current climate rewards well-prepared sellers with streamlined sales timelines and successful deal outcomes.

For those entering this area, partnering with experienced advisers can make all the difference. MDN Group’s M&A advisory services help buyers and sellers identify and evaluate opportunities that align with long-term objectives. With extensive expertise and a deep understanding of market nuances, MDN Group can guide companies through the complexities of incremental acquisitions, ensuring each step contributes meaningfully to sustainable growth.

If you are considering buying a business to expand your market presence, MDN Group can connect you with carefully vetted targets and advise you on integration strategies. For those contemplating an exit, selling a business through MDN Group’s network and strategic support can streamline the sales process and help secure a successful outcome.

Next Steps: Secure Your Growth

Whether you are a buyer aiming to capitalize on incremental growth opportunities or a seller seeking optimal exit conditions, MDN Group provides the guidance and resources necessary to navigate today’s dynamic M&A environment. For more information on how to structure your next move, visit contacts to speak directly with their seasoned professionals. By embracing a deliberate, step-by-step acquisition strategy, your business can seize control of its growth trajectory, achieving resilience and competitive advantage despite market uncertainties.

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