Business leaders know how to take advantage of opportunities that
occur in the normal course of operating their business. These "organic
growth" opportunities can most often be seized with internal company
resources and require the same skills and knowledge used in the day-to-day execution
of the business. But when these natural growth opportunities fail to
satisfy the company goals, or if management wants to explore new
directions, more aggressive and creative methods must be used.
Does It Take?
Many companies create new opportunities by acquiring other
businesses. Some may license new technology for commercialization. Selling
a business unit to focus or fund growth in a core business area is also
common. To successfully execute any of these requires unique skills,
experience, creativity and training.
In most cases, the professionals inside the business are ill prepared
to initiate expansion efforts, or are simply too busy. As anyone who has
failed at such ventures can tell you, using catch-as catch-can resources
leads to disappointing results. Large companies (with sales exceeding $100
million) may be able to effectively leverage the cost of in-house resources
(such as legal services, negotiation specialists, due diligence teams, and
others) across a large volume of growth opportunities, but smaller
companies have episodic needs for these specialized skills. For these
companies, hiring permanent in-house staff would not be cost-effective. As
a result, company principals may assume the tasks themselves and bear the
formidable risks. Or, they can look outside to a specialized group with a
proven track record.