Build Borrow or Buy - an M&A strategy book
20240108.2 - A brief book review of Build Borrow or Buy
Recently, I've been doing a lot of research around M&A's, and as a result, I came across a couple of interesting insights. The first comes from a book called "Build, Borrow, or Buy," written by INSEAD professor Laurence Capron.
In this book, the premise is that the vast majority of companies over-rely on mergers and acquisitions as a means of growth and strategy. There are a multitude of reasons for why this is the case, but it turns out that the vast majority of mergers and acquisitions tend not to perform the way they were expected to. We can assume that by this we mean they are not generating revenue.
So instead, the question becomes what alternative options do companies have beyond mergers and acquisitions, and how should they better think about which of these options their strategy is most suited towards?
The clue is in the title: the options are to build it yourself, to borrow (meaning either set up a simple contract or a more complex alliance), and finally, buy (i.e., purchase via merger and acquisition).
In the book, Laurence Capron presents a Resource Pathways Framework which intends to improve the decision-making process for how to decide which of the three strategic options makes the most sense for a business. The book suggests various factors that influence the decision for each of the three options, essentially resulting in 16 different possible outcomes.
I like that the framework is pretty simple and the outcomes are mapped out pretty clearly; however, they can be challenging to interpret. And while it is a theoretical model, it's quite strong logically. I'm not sure things are as clear in practice. I think the book starts halfway through the conversation and does not delve into the reasons why the company is choosing to go down this path. So I find that it's kind of providing a full answer for half the question. The issue I have with this is that if the question is incomplete, no matter how fully you answer it, it's not a full answer.
So, whilst the book has extreme value and I think the framework is incredibly useful, you need to come to this book after you have a clear idea of what your strategy is for your business. I put a screenshot of the Resource Pathways Framework below and strongly recommend you have a read of the book and come to your own conclusions.
Heres the website for the book
