If you are a would-be acquirer eager to embark on your M&A strategy in 2025, you are probably already familiar with the traditional M&A process. But how much do you know about programmatic M&A – and could it be the route to growth and diversification that you’ve been looking for?
To answer these questions and more, we’re going to explore programmatic M&A in detail, uncovering the pros and cons and providing you with some top tips on how to make a programmatic M&A strategy a success.
First things first, though – what exactly is it?
Programmatic M&A – In Brief
Also known more colloquially as a ‘roll-up’ strategy, programmatic M&A differs from the traditional form in that, rather than one significant acquisition, it involves one company acquiring a series of smaller businesses over time.
These smaller organisations are collected under one umbrella, providing consistent growth and diversification for the parent business, as well as a range of other benefits.
The truth is, these ‘roll-up’ deals have been a fixture of the corporate world for many years now, with many companies choosing to take this approach to gain higher returns on their investment and grow and enhance their offerings.
However, if you are only just considering this kind of strategy then you’re probably keen to ascertain whether a ‘roll-up’ would work for your business too.
To help you make your decision, here are some of the main advantages you can stand to gain by engaging in programmatic M&A.
The benefits of programmatic M&A
- The risks are lower
Because programmatic M&A is characterised by a series of smaller deals, rather than one hefty transaction, they are typically lower risk than a traditional acquisition. Investing substantial amounts of capital in one big purchase means you could be hit by a significant loss if something goes wrong.
However, spreading your investment over several smaller purchases means that, even if one of them falls through or suffers issues, you should still achieve a decent ROI.
- Your business will benefit from continuous innovations
Acquiring several smaller businesses over time allows you to continually add a series of innovations, products, and technologies to your portfolio. Besides providing you with a raft of new ways to respond to consumer demand for your products or services, this steady enhancement will, in turn, help your organisation to secure a more robust foothold in the market while fending off competitors.
- You will experience slow but steady growth
Although a ‘roll-up’ strategy provides you with a slower upward trajectory compared to one singular acquisition, you will experience continual growth as you continue to add new products, services, technologies, and team members to your company. This slow and steady approach can help to infuse your business with resilience and long-term sustainability.
- Greater reactivity to new market trends
Choosing to acquire several smaller businesses, rather than proceeding with one significant purchase, gives you more options when it comes to reacting to emerging market trends. As new dynamics emerge, you can respond by strategically acquiring businesses that meet the evolving needs of customers. This allows you to keep one step ahead of the competition and boost your growth and your revenue.
The downsides of the programmatic approach
Before you start to eagerly plan out your programmatic M&A strategy for 2025 and beyond, you need to be aware of the disadvantages. Depending on the acquisition, these can match or even outweigh the pros.
- Difficulties with integration
Post-sale integration is a challenging part of the M&A process in both traditional and programmatic M&A strategy. However, it is arguably even more difficult for those opting for the programmatic route, as you will need to handle multiple integrations rather than just one.
Unsurprisingly, this can become a deeply complex juggling act. After all, you are dealing with different teams of individuals, some of whom may not have been comfortable with the acquisition to begin with. Ensuring that the transition takes place as smoothly as possible for all concerned can be difficult, to say the least – and this is a delicate process you will have to repeat several times.
- Poor cultural fit
Each company has its own unique culture, values, behaviours and attitudes to work. As a result, in the same way that you can have personality clashes in the workplace, you can also have cultural clashes as you try to integrate different cultures beneath one umbrella. These cultural difficulties can throw up numerous obstacles as you try to create one seamless entity, including creating substantial headaches for your management team.
- Mounting expenses
Although programmatic M&A is deemed lower risk than traditional M&A, which often focuses on one much more expensive purchase, programmatic M&A can still rack up sizeable expenses over time. This is where careful budgeting must come into play, to ensure you don’t bite off more than you can chew with multiple acquisitions over time. It’s important to have a financial safety net in place so you can weather unexpected storms, from a shrinking market to a wider economic downturn.
Trends to be aware of
Now that you know the main pros and cons of adopting a programmatic M&A strategy, it’s time to shine a spotlight on some of the latest trends, which could inform your own process.
Prioritising ESG Compliance
As evidence of climate change – including extreme weather events – becomes more obvious and more alarming, ESG compliance is now a vital consideration when running a business. What’s more, it’s become a central part of M&A strategy, as businesses seek to acquire organisations that offer products, services, or operational approaches that will help them meet ESG targets.
This is an important consideration to bear in mind as you scrutinise potential acquisition targets for your programmatic M&A approach. Making strategic acquisitions that enhance your ESG compliance will benefit you in the long run, including preventing you from incurring compliance-related fines, and helping you to avoid any loss of reputation that could come from failing to meet your sustainability goals.
AI Adoption
The influence of AI is almost everywhere these days, and it has an increasingly important role to play in the sphere of mergers and acquisitions. Using AI analytics and other tools, you can perform a range of vital tasks to benefit your M&A strategy, from keeping track of the latest market trends to locating optimal targets and revolutionising due diligence.
Top tips for maximising your programmatic M&A strategy
- Careful preparation is key
Dedicated programmatic M&A adherents who create a multi-faceted acquisition strategy tend to outperform other acquirers who follow a more traditional or organic approach.
They achieve this by creating a detailed ‘blueprint’ for their acquisition strategy as well as by taking a very proactive role in the M&A process. This includes focusing on shrewd portfolio management, mastering the careful allocation of capital, planning for economic downturns, and devising a consistent acquisition plan that they can stick to even during those downturns.
- Set synergy targets
If you have spent any time at all in the world of mergers and acquisitions, then you will probably already have an awareness of the importance of synergies. Synergies are the specific advantages that can be gained from one business merging with or acquiring another.
Effective programmatic acquirers set a series of synergy targets and then carefully calculate and monitor the cost of achieving those synergies. This regimented approach allows them to maximise the value of their deals while capturing sought-after synergies and maintaining a cost-effective strategy even in difficult economic periods.
- Nurture a robust corporate culture
Finally, successful programmatic acquirers understand the importance of beginning the M&A process from a place of strength. This means nurturing a healthy and positive company culture that can weather any corporate turbulence and is primed to seamlessly integrate new team members and new products, services, and solutions.
How a business broker can help
As you can see, programmatic M&A can be a highly effective strategy with careful, conscientious planning, strict budgeting, and a strong understanding of the synergies you’re after.
However, it can also be complicated, involving several complex stages that you have to repeat with each new acquisition – from verifying potential targets to negotiating and performing due diligence.
To help you maximise your M&A strategy, it may be worth investing in the services of a tried-and-trusted business broker who can help you achieve your programmatic acquisitions. Here at Harris Acquire, we can provide you with invaluable insights and advice to enhance your strategy; we can also assist with every stage of the acquisition process, from sourcing the best targets to helping with negotiations, due diligence, and closing the deal.
To find out more about how we can help with your M&A strategy – whether you prefer the programmatic approach or the organic route – give us a call on 01926 757100 or send an email to Hello@harrisacquire.com.
