Exploring key considerations for women business owners
In today’s dynamic economic landscape, women are creating businesses at a pace that far exceeds the rest of the population. However, when it comes to scaling their businesses, women business owners often face challenges that hinder their success, such as access to capital, compared to men. A powerful strategy women business owners may consider to accelerate growth is through mergers and acquisitions (M&A).
Common reasons a firm may consider M&A as a tool to grow a business include access to new products and services, expanding geographic reach, enhancing talent and innovative tools, and acquiring new customers. By strategically leveraging M&A opportunities, women entrepreneurs can enhance their company’s financial success and stability to build a more sustainable and profitable organization.
As the National Women’s Segment Leader for Wells Fargo Commercial Banking, I speak to women business owners and entrepreneurs every day, and I’m surprised how many have not considered M&A as part of their growth strategy. Common misconceptions are often based on the idea that M&A activity is for large companies, or that the efforts to successfully execute on a merger or acquisition may not be worth the time or resources needed.
In a recent conversation with Ranjini Poddar, Founder and CEO of Artech, a leading IT Staffing firm, Ranjini shared her company’s journey and thoughts for other entrepreneurs who are exploring M&A. She explained, “We started off our journey from virtually nothing with just $210,000 dollars and a dream. Reality hit us soon enough and we quickly exhausted our seed capital. Over the years, through M&A as well as organic growth, we ultimately became a company with more than $900 million in annual revenue.”
Ranjini’s experience was a success, thanks in part to a strong strategic plan.
“As the old saying goes, to fail to plan is to plan to fail and that is especially true of M&As,” she said. “Focus on the financials, the market, the customers, and products, and the people. Begin planning for M&A early and if something doesn’t feel right, do not ignore it and work it through carefully. Formalize the integration strategy – over the course of M&A, you need strong leadership to focus on the due diligence process, risk assessment review, and to manage the financials.”
I also spoke to Monika Mantilla, Managing Partner at Altura Capital, to ask her perspective as a capital provider and she believes that shared cultural values between the companies is essential. Monika explained,
“One of the most critical factors for a business owner to consider in M&A is strategic fit. While finding the ideal company under favorable market conditions, with low or manageable risk, attractive valuation, and sound control and governance terms is important, cultural alignment surpasses all. If your company’s values, behaviors and vision for future growth doesn’t align with the merging entity and key stakeholders, all other aspects become inconsequential. It is vital to ensure cultural compatibility to foster a successful M&A integration.”
Choosing the right type of capital provider to fund M&A is another key element of success. Evaluating which type of capital works for each circumstance is based on many variables and having strong relationships with more than one capital provider can give business owners more insights into which option may be best depending on the stage of business.
Mergers and acquisitions present a transformative path for women entrepreneurs looking to grow and scale their businesses, and I am eager to see more women explore this strategic tactic to continue to build successful companies that solve problems, create jobs and enrich our society.
Throughout June 2023, WBENC LIFT, together with Corporate Members Citi, Wells Fargo, State Farm, and MassMutual, is offering essential virtual programming focused on Access to Capital and WBE Readiness to do business in the Financial Services and Insurance Industry. The first half of June focuses on Access to Capital, with the second half focusing on being ready to win and maintain new business within the Financial Services and Insurance Industry.
Wells Fargo also presented this popular topic to a standing room only crowd at the 2023 WBENC National Conference.
