Industry Lifecycle Phase and M&A

M&A activity can vary depending on the acquirer and/or target’s phase in the industry lifecycle.

Pioneering Phase: start-up founders may opt to “cash out” of their promising ventures by selling to larger companies that are seeking growth opportunities. Horizontal and conglomerate mergers.
Accelerating Growth Phase: highly profitable and fast growing companies in new industries may sell themselves to more established companies in order to access capital for business expansion. Horizontal and conglomerate mergers.
Mature Growth Phase: larger companies with slowing growth rates may look for targets with value potential or targets that can facilitate economies of scale. Horizontal and vertical mergers.
Industry Maturity Phase: an acquiring company is now growing around the same pace as that of the economy; it will look for targets that can increase economies of scale or invest in small growing concerns that provide return opportunities for shareholders. Horizontal mergers.
Decline Phase: overall industry is shrinking; an acquirer may look for synergies, to buy profitability of younger firms, or to simply survive. Horizontal, conglomerate, and/or vertical mergers.

M&A activity can vary depending on the acquirer and/or target’s phase in the industry lifecycle.

Pioneering Phase: start-up founders may opt to “cash out” of their promising ventures by selling to larger companies that are seeking growth opportunities. Horizontal and conglomerate mergers.
Accelerating Growth Phase: highly profitable and fast growing companies in new industries may sell themselves to more established companies in order to access capital for business expansion. Horizontal and conglomerate mergers.
Mature Growth Phase: larger companies with slowing growth rates may look for targets with value potential or targets that can facilitate economies of scale. Horizontal and vertical mergers.
Industry Maturity Phase: an acquiring company is now growing around the same pace as that of the economy; it will look for targets that can increase economies of scale or invest in small growing concerns that provide return opportunities for shareholders. Horizontal mergers.
Decline Phase: overall industry is shrinking; an acquirer may look for synergies, to buy profitability of younger firms, or to simply survive. Horizontal, conglomerate, and/or vertical mergers.