Entrepreneurs

Council Post: The Value Of Mergers And Acquisitions: When To Buy Over Build

By Greg Mercer, founder and CEO of Jungle Scout, the leading all-in-one platform for selling on Amazon.

Effectively serving your customers means taking a pulse check on your biggest product gaps and understanding how you can fix them. For some companies, growth may mean creating or optimizing your own technology — for others, it could mean acquiring it.

As the founder and CEO of the leading all-in-one platform for selling on Amazon, I’m constantly thinking about how we can improve our products to help our customers achieve success.

Throughout my company’s history, we’ve opted to build and buy to achieve several growth milestones for varying reasons. 

Today, I’m sharing more about our most recent acquisition and its value to our product suite. I wanted the company to have a robust solution for managing and optimizing ads on Amazon. For starters, the Amazon advertising space is one of the fastest-growing sectors of e-commerce. Plus, sellers, brands and agencies rely on pay-per-click (PPC) ads to make more sales, faster and with a leaner budget. 

Thus, the decision: Do we build it or buy it? Here are some key reasons we chose to buy over build.

Save Time And Resources

We wanted the ultimate ad software for our customers — and we discovered one was already out there. After evaluating over 50 tools for Amazon ad optimization, we found an enterprise-ready software solution that helps brands measure, scale and optimize their ad presence on Amazon.

Acquiring this company allowed us to focus our product roadmaps on enhancing current features instead of reprioritizing projects to build something new.

When you’re building a product, there’s a possibility of unforeseen costs, too. A fully developed product has those kinks ironed out, so you can devote time to integrating, not iterating.

(While we believe that this new acquisition is the missing piece of our company’s core platform, there’s still a lot of building and integrating to do. It takes a while to leverage data, streamline software and learn the ropes, but that’s a part of the responsibility of acquiring new tech — you have to nurture it for it to succeed.)

There’s obviously a significant upfront cost of acquiring a product of high caliber. Maybe this expense will divert funds and have short-term negative effects on other initiatives such as hiring or investment in another product, but on the other hand, buying the technology gives you a clearer fixed cost for the business.

Partnering with a company that is a leader on such a specialized topic was a natural move for our team and time line. I knew acquiring would only accelerate our mission of building a complete solution for enterprises and third-party sellers. The company had a huge running start with a superior product that we couldn’t pass up.

Add Expertise To Your Team 

One of the most invaluable advantages of acquiring a company is the incredible talent you’ll gain. We wanted to grow with a company that aligned with our values. The customer obsession of the company we acquired mirrors our goal of delivering a first-class experience with transparency, support and resource-rich content, and incredible insights to inspire businesses to achieve new heights.

While I consider myself an expert in my field, I was confident that someone knew the space better than I did — and we found them in the co-founders of the company we acquired.

Having the opportunity to learn from different thought leaders is critical to keeping your ideas fresh and relevant. And it’s always exciting to work with the best in the industry. Additionally, nine other members of the acquired team joined our company, bringing their diverse knowledge of the product and the e-commerce advertising world, as well as contributing fresh takes on the rest of the company’s platform.

Champion Your Vision

Acquiring a company is a tremendous credibility boost. You’re signaling to your customers, team and investors that you’re in touch with the industry and intentional about growing your business and brand.

However, it can be challenging to balance the needs of different customers within your business. Some users may wonder how a new product will benefit them. This is your opportunity to communicate a refreshed value proposition to your customers.

It’s important to constantly reevaluate what your customers want out of your offerings (old and new): What do my current customers need to be successful? How can I best serve the customers I’ve acquired? This practice can help you level-set your product roadmap, set larger company goals and inspire you to rethink your product’s ultimate mission to smooth over transitions.

Now, the real work begins as we combine our forces to refine our offerings and merge into one powerful platform.

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