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The Chairman's Blog

Acquisitions Are Hitting a Wall

Companies are struggling to grow -- so they're giving up and acquiring their competitors.

This is the current growth strategy of most Forbes Global 2000 (G2000) companies. As a result, the number of publicly listed companies traded on U.S. exchanges has been cut almost in half in the past 20 years -- from about 7,300 to 3,700.

Globally, according to the World Bank, the number of listed companies on any exchange -- currently 44,000 -- has been largely stagnant since 2006, with a recent two-year decline.

The herd is getting pretty small. At some point, this acquisition strategy hits a wall.

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In a perfect world, the market would have doubled the number of big public companies instead of halving it.

We are not telling our clients to stop acquiring. But we are advising them to get better -- fast -- at real customer growth, especially in foreign markets.

G2000 companies need a different global customer vision for growth.

There is more growth potential in customer strategies than in acquisitions. Gallup's behavioral economics finds only 29% of your B2B customers are maximized -- or engaged -- according to a just-released Gallup report. That means 71% of global B2B customers are either indifferent toward your company or actively disengaged with it. There are tens of millions of dollars of lost growth opportunities in single customers, let alone hundreds of millions of dollars throughout your customer base.

You don't have to bust the bank to maximize customer growth and margins. You need the right analytics and advice.

So what do we recommend you do? We recommend adding a customer growth strategy to your existing acquisition strategy -- one dedicated to finding large amounts of low-hanging fruit in your current customer base and especially in foreign markets.

Gallup


Gallup http://www.gallup.com/opinion/chairman/188975/acquisitions-hitting-wall.aspx
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