Resilience isn’t about simply being able to weather changes. A different form of resilience may prioritize being agile and adaptable, which can be difficult to focus on when merely focusing on survival. A defensive M&A strategy can help to build this resilience in a few ways: delivering value, optimizing portfolios, and strengthening positioning.
For example, supply chain issues have been a recurring challenge over the past couple of years. To address that, a company could consider an acquisition of a supplier. This happened recently in response to the global semiconductor chip shortage crisis. A major chipmaker acquired a specialist chip contract manufacturer to boost production capacity and secure its customer base.
Companies could also seize on opportunities through co-investment and partnerships, including with private equity firms. This kind of collaboration can facilitate transformation by pooling resources and expertise, which in turn helps to build resilience.
Similarly, offensive strategies are also a way to capitalize on opportunities. However, an offensive strategy is grounded in gaining momentum rather than building resilience. Corporations could do that by transforming business models, collaborating to stay competitive, and capitalizing on cross-sector convergence. Many opportunities nowadays need to be considered through the lens of whether to build, buy, or collaborate to achieve a goal. These dynamics have pushed the expansion of the scope of traditional M&A strategies to include collaborative structures, partnerships, and other configurations.
For instance, environmental, social, and governance (ESG) goals often can’t be achieved unilaterally and demand collaboration; it can take multiple collaborators
to make an impact. A useful example of this is the decarbonization of the aviation industry. To tackle this goal, an aircraft manufacturer, industrial gas supplier, and airport operator formed an alliance to promote the use of hydrogen infrastructure. Although this isn’t necessarily an example of a traditional merger or acquisition, it captures the positive potential of this broadened vision of M&A.
