Business Valuation - Organic Growth vs Acquisiton Flashcards
1
Q
What does organic growth Involve?
A
Organic growth involves the retention of profits/raising of finance to invest in internally generated projects
2
Q
What are the advantages of Organic Growth?
A
The costs are spread out over time
Avoids disruption and behavioural problems that can be associated with an acquisition
3
Q
What are the disadvantages of organic growth
A
Slower method of growth than acquisition
Can be more risky than acquiring an established business
4
Q
What are the advantages of Acquisiton?
A
Faster approach to growth
Overcomes barriers to entry in new markets
5
Q
What are the disadvantages of Acquisiton?
A
High up-front costs
Purchasing companies often over pay for the acquisition
Disruption and behavioural problems arise on acquisition
