It seems like 2017 will be a strong year for acquisitions. A new report highlights a number of factors that could drive activity this year including the record levels of cash held by private equity firms and a favorable lending environment for borrowers.

Potential changes to U.S. tax policy under the new administration could reduce the corporate tax rate and encourage companies to repatriate offshore cash to invest in acquisitions.

2016 was a year full of uncertainty, from Brexit to the U.S. presidential elections, but as the economic and political landscape stabilizes, business leaders are regaining their confidence. 80% of executives surveyed predict M&A activity will increase in 2017. These market conditions may be the right recipe for increased acquisitions, especially for companies facing poor organic growth prospects.

In the first quarter alone, a number of significant transactions have been announced including the owner of Burger King and Tim Horton’s acquiring Popeyes, Mars acquiring pet hospital company VCA, and Intel pushing into the self-driving car space by purchasing Mobileye. These deals will likely spur additional acquisitions as key players react to changing industry dynamics and competition.

While we don’t know if M&A in 2017 will match 2015’s record level, we can certainly expect an uptick in activity for the remainder of the year.

Photo credit: Igor Trepeshchenok / Barn Images 

You do not need an M&A advisor to pursue acquisitions. You might think I’m crazy for saying this, after all, we are M&A advisors, but the truth is you can pursue acquisitions on your own. In fact, for those of you who are so inclined to take the do-it-yourself approach, I lay out a step-by-step process, the Roadmap to Acquisitions, in my book Successful Acquisitions and regularly provide tips and tricks for free on this blog and through my firm’s educational resource M&A U™.

That being said, there are many benefits to bringing on an experienced M&A advisor. Think of it this way: Technically, you do not need a CPA to do your taxes. Depending on your situation, you may be able to go through the paperwork, file your taxes on your own and hope you don’t get audited. Or, you could consult an experienced professional and rest easy, knowing the job will be done right.

The advantage of an M&A advisor is having an expert by your side for every step in the process. Unfortunately, especially if your company has never done an acquisition, it’s difficult to tell if you are missing any important steps until it’s too late. An experienced advisor will help you navigate the process and avoid making mistakes.

Here are five advantages of using a third party:

  1. Objective outsider to help evaluate decisions – Acquisitions can be emotional and as a third party, an M&A advisor can help facilitate discussions and resolve conflicting perspectives.
  2. Experienced market and company research team – In addition to accessing to multiple databases of industry information, a third party can speak directly to key industry players without giving away your interest in making an acquisition.
  3. Discreet approach to owners – One of the advantages of privately-held acquisitions is the ability to execute your strategy under the radar. An M&A advisor can approach companies – even competitors – on your behalf without exposing your plans to marketplace.
  4. Maintain negotiation momentum and overcome roadblocks – Negotiating during acquisitions is not about “winning,” it’s about understanding the motivators that will prompt an owner to sell. It takes experience to discover these underlying desires that will help move the deal forward.
  5. Ensure early preparation for success integration – When it comes to integration, experience has taught us that preparation begins very early in the process, well before the deal is consummated. With the help of an advisor, you can address integration issues early so that you successfully weather the challenging first 100 days of integration post-closing.

Does this sound familiar? You want to grow through acquisitions, but there are no good companies to acquire. While it may seem like there are absolutely zero acquisition prospects, usually that is not the case.

Many companies struggle to find acquisition prospects because they are focusing on only on industry partners, suppliers, or competitors they already have a relationship with. We call these companies the “usual suspects.” There’s nothing wrong with looking at the “usual suspects” for acquisition opportunities, but if you find you are hearing the same company names over and over again without getting any results, it may be time to try a new approach.

Here are four more ways to find quality acquisition prospects in addition the “usual suspects”:

  1. Market Research – In researching the market you will naturally uncover a few potential acquisition prospects. You will also have the advantage of gaining a deeper understanding of the market which will help you select the best companies to acquire, evaluate potential acquisition candidates, and negotiate with owners.
  2. Trade Shows / Associations – Both are an excellent source for finding many companies in your desired industry in a short amount of time. Walk the floor of a trade show and you’ll see dozens of companies all in one location and many trade associations also member companies listed on their website.
  3. Internal Input – Use the resources you already have. Your sales team is filled with folks who have their ear to the ground and are up-to-date on key players and new developments in the industry.
  4. For-sale Companies – Looking at for-sale companies is never a bad place to start your search. Just make sure you don’t limit yourself by only considering these opportunities. Including not-for-sale companies in your search will increase your chances for a successful acquisition. Remember, every company is for sale, for the right equation.

For more tips on finding companies to acquire join our webinar Building a Robust Pipeline of Acquisition Prospects on March 23.

After this webinar you will be able to:

  • Approach the search for the right acquisition prospect systematically
  • Understand effective research methods for identifying prospects
  • Develop criteria for your ideal acquisition prospect
  • Use tools for objective decision-making during the acquisition process

Building a Robust Pipeline of Acquisition Prospects

Date: Thursday, March 23, 2017

Time: 1:00 PM – 2:00 PM EST

CPE credit is available.

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Should your credit union acquire a bank? If you are looking for new ways to grow, acquiring a bank may be an option for your credit union.

Capstone is excited to host a webinar attorney Michael Bell, who pioneered this new approach and continues to help credit unions acquire banks. The webinar will cover the strategy and mechanics behind a credit union-bank merger as well as challenges and proactive growth opportunities for credit unions.

Seizing Your Opportunity for Growth: Exploring the  Credit Union–Bank Merger Trend with Expert Michael Bell

Date: March 9, 2017

Time: 1:00 PM / 12:00 PM EST

Michael Bell is an attorney at Howard & Howard and a leading advisor to credit unions and national financial institutions seeking non-organic growth, strategic advice. In 2011, Michael completed the first ever purchase of a bank by a credit union. Michael continues advising credit unions in this area and has completed every credit union purchase of a bank to date. He is a “go-to” legal advisor in this area.

Founded in 1995, Capstone is a leading advisory firm focused on helping companies grow through proactive, strategic growth programs and mergers and acquisitions. As the leaders in strategic mergers and acquisitions for CUSOs, we have helped numerous credit union and CUSO leaders develop, evaluate, and implement initiatives for growth. Learn more at www.CapstoneStrategic.com.

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Global M&A reached $3.7 trillion in 2016, dropping 16%, and the number of deals increased slightly by 1% when compared to last year. While 2016 did not match 2015’s record-levels, activity was still robust. Compared to 2014, activity increased by 5%.

Activity in the fourth quarter reached $1.2 trillion with 13,504 deals announced, a 50% increase in deal value and 18% increase in the number of deals when compared to 3Q 2016. This year, there were a number of interesting deals to note, including the AT&T’s acquisition of Time Warner transactionVerizon’s deal with Yahoo, and GE Oil and Gas combining with Baker Hughes.

Click on the infographic for a closer look at M&A in 2016.

M&A Update Year End 2016 - Capstone Infographic

Happy New Year! We are excited to announce the 2017 webinar schedule and invite you to join us this year for these exciting events.

For over 20 years we have helped companies grow and educated business leaders on strategic growth through mergers and acquisitions. Each webinar is led by a seasoned M&A professional providing practical tools and tactics to accelerate your company’s growth. You can watch individual webinars or attend the entire program to earn the M&A U™ webinar certificate.

2017 Webinar Schedule

* Topics and dates subject to change
Photo Credit: Barn Images

The Street interviewed Capstone CEO David Braun for the article “Hollywood Reporter-Billboard Media Likes Sound of SpinMedia’s Music Brands.”

In the article David Braun analyzes the deal’s strategic rationale and discusses how traditional media businesses can continue to grow amidst a changing environment. As print media declines and digital media consumption rises, traditional publishing and communication companies must find new ways to stay relevant, capture market share and most importantly revenue.

Read the full article on The Street here: Hollywood Reporter-Billboard Media Likes Sound of SpinMedia’s Music Brands.”

When you think growing your business in 2017, you probably picture hiring more sales people, opening a new branch, developing additional products or acquiring state-of-the-art technology. Today I want to introduce a new concept for consideration: growing by exiting a business. Before you immediately dismiss the idea, take a moment to challenge your assumptions about company growth and allow yourself to be open to a new perspective. The reality is in some cases exiting may be the best path for growing your company.

Here are three ways exiting can help you grow.

  1. Get Focused – By exiting non-core business lines you can be focus on what you’re really good at. Take P&G for example. Over the last few years the company has adopted a strategic focus and shed over 105 brands in order to focus on 10 fast-growing categories. Shedding these non-core business lines will help P&G become more profitable. You may have some business lines you want to divest so that you can refocus your strategy and resources on what you truly excel at.
  2. Avoid Losses – If a part of your business is no longer profitable, you should evaluate whether or not you should keep going. Maintaining a business simply because you’ve always done so is not a good reason. The world changes and it may be that your customers no longer have a need for this product. For example, it would be crazy to continue manufacturing VCRs in today’s world.
  3. Grow Your Bottom Line – While overall sales or number of customers may shrink if you exit a market, your overall profit may grow. We once worked with an American manufacturer who made millions of die-casting products for various industrial customers. Unfortunately, many of their customers were purchasing cheaper products from China. Faced with this competition, our client decided to reinvent themselves into a maker of specialty components for the aerospace industry. They sold their old equipment and purchased the latest technology. As a result, their customer base shrunk tremendously, but profit rose.

When we hear the word “growth,” we automatically think about “more,” “bigger,” “expanding” not “less,” “smaller” or “shrinking.” While many would never consider exiting a business in order to grow, I encourage you to consider it as you develop your strategic growth plan.

Learn more about growing your business in our webinar 5 Options for Growth.

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2016 continued be a strategic, rather than a financial buyer’s market and strategic buyers deployed large cash reserves to pursue growth through M&A. Unlike financial buyers, which typically look for a three to five years return on investment, strategic buyers can afford to pay more due to their long-term focus.

The middle market has been eager to use M&A as a viable tool for growth. Despite a challenging economic environment, activity in the middle market remained stable in 2016, dropping only 3.5% in 3Q 2016.

As we close out 2016 and look forward to 2017, here is a roundup of the most popular posts of the year from the Successful Acquisitions blog.

  1. The Most Important Thing about M&A According to Warren Buffett
  2. 10 Signs You Should Walk Away from a Deal
  3. M&A Activity after the U.S. Election: Analysis and Outlook
  4. 7 Strategic Questions to Ask Before Pursuing Mergers & Acquisitions – New Webinar
  5. How to Avoid Irrational Decision-Making in M&A
  6. 5 Tips for Taking a Strategic Approach to M&A in 2016
  7. Is Middle Market M&A on the Rebound?
  8. Growth Through Acquisition – Exit Readiness Podcast Interview
  9. How to Break Bad News without Sinking Your Acquisition
  10. What Is Happening with Valuation Multiples Today?

Thank you for reading and we will see you all in 2017.

Photo Credit: Barn Images

2016 has been a year of surprises with the U.K. voting to leave the European Union, fears over China’s economic slowdown, oil price slumps, and Donald Trump winning the U.S. presidential election. Despite these shocks to the market, 2016 will likely be the third best year for global mergers and acquisitions in the past 10 years and dealmakers predict that 2017 will be even stronger.

2017 Outlook

There are many factors that may contribute to robust M&A activity next year. Capital remains available and cheap and in the latest Livingston Survey from the Federal Reserve Bank of Philadelphia, economic forecasters have strengthened their outlook for the U.S. economic environment and their predictions for stock prices. The possibility of tax reform under the new presidential administration may also boost M&A activity. Most importantly, CEOs remain confident and willing to execute deals to grow their businesses.

Geopolitical upsets like Brexit and the outcome of the U.S. presidential elections may dampen activity as some may wait to see how these situations will affect their business and the marketplace. Changes in the interest rates may also reduce activity in some sectors, but create new opportunities in others such as financial services.

Top Sectors for 2017

Strong activity is expected in the following sectors:

  • Consumer product
  • Telecommunications, Media and Technology (TMT)
  • Industrials
  • Healthcare
  • Financial services
  • Oil and gas

What Do You Think?

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Are you exploring all your options for growth? When you think about a growing your credit union or CUSO through a “merger” strategy, you may be tempted to focus on consolidation alone. While combining two credit unions can be a pathway to growth, it is important to recognize it is just one of a number of options available to you. Consolidation may not be the best solution for your organization and may not help you add the value you had hope for.

In a CU Insight article, Kirk Drake, CEO of Ongoing Operations, a credit union service organization, and John Dearing, Managing Director of Capstone, discuss the growth options available to credit unions and CUSOs and how to use strategic mergers and acquisitions to maximize your growth potential.

Read the article on CU Insight.

As expected, Verso is consolidating locations and moving its headquarters from Tennessee to Ohio. Verso purchased NewPage Holdings for $1.4 billion in January 2014, but later filed for Chapter 11 bankruptcy. While Verso has emerged from bankruptcy, the company is not out of the woods yet.

“You’ve got a wounded company cutting staff, and that hurts morale,” says Capstone CEO David Braun in The Memphis Business Journal. David says Verso will have to do more than simply cut costs in order to be successful in the long-run. Read the full article here: Even after move, Verso will have more cuts to make

 

One month after the U.S. presidential election, there is still a great deal of speculation about what will happen in the M&A market over the next year. Looking back at M&A activity so far this year, compared to 2015 activity, fewer and smaller deals were announced. During the first 9 months of 2016, M&A value dropped by 30% to $1.07 trillion and average deal size dropped by 22% to $132 million. This year we have seen fewer huge, double-digit billion dollar transactions which dominated the marketplace in 2015.

Part of the reason is that historically, leading up to a presidential election where there will be a change of administration, there’s been hesitation in the marketplace. Business people don’t like uncertainty and as a result are less likely to take action.

The outcome of the election caught a number of people off guard, and we have already seen some impact in terms of some deals that are getting re-priced, accelerated or delayed in response. For example, in the healthcare space there’s uncertainty about how the Affordable Care Act will be impacted and we’re seeing a pullback in deals that touch upon it.

Despite this, over the next 24 months we expect an uptick in M&A. We’re already seeing a strong pipeline of deal activity as a result of the election being behind us. The business climate is still somewhat unsettled, but there’s a sense of relief the election is over.

Photo Credit: D Williams via Flickr public domain

When you acquire a company, the biggest risk you face in the unknown. You put a potentially large sum of money down for results that are not guaranteed. Whether you are acquiring a company for a new technological capability, to expand your geographic footprint, or for its complementary product line – there’s always the possibility that the transaction won’t yield the desired results or that it will cause problems and even hurt your company.

In the news we hear about bad acquisitions and there is an entire book, Deals from Hell, that recounts exactly what went wrong in many of these high profile transactions. Acquisitions are inherently more risky than hiring a new employee that you could fire if you find it is not working out. Once you acquire a company, it is yours, and you’re not going to be able to “fire” it.

If Acquisitions Are Risky, Why Acquire?

If acquisitions are so risky, then why do companies do them? If done right, acquisitions can bring about great rewards and next level growth to your company. M&A is inherently a high risk, high reward tactic, but you can take steps to reduce your level of risk by using a proven M&A process. A proven process will help you identify the right acquisition so you can maximize your opportunity for success.

The Roadmap to Acquisitions

Think back to the example of hiring a new employee. Your HR department probably has a manual with a process for job posting, interviewing, and onboarding employees in order to ensure they are a good fit at your company. As we mentioned earlier, although you expect results from your new employee, if you find it’s not working out, you can always let them go. Why wouldn’t you have a process for acquisitions as well?

The process we use is the Roadmap to Acquisitions, which we developed from over 20 years’ experience helping clients grow through acquisition. The Roadmap takes a holistic perspective on the acquisition process, beginning and initial strategy all the way through deal execution and integration planning. I highly suggest using an M&A process or having a strategic plan before you begin pursuing acquisitions. This will help your reap the rewards of M&A while reducing your exposure to risk.

Photo credit: Derek Gavey via Flickr cc

We generally recommend taking between 30 and 60 days to complete due diligence. We find this is enough time to complete a thorough evaluation of the business without letting the process drag on.

Due diligence will include onsite visits with your internal team and your external team of lawyers, accountants, and your third party M&A advisor. Your internal team should include more than just your CFO; we recommend involving your functional leaders from sales, marketing, and operations in this process because they will be in charge of running those functional areas once you complete the acquisition. Involve these functional leaders as early as possible so they can start learning about the business that’s being acquired and not only look for issues but also identify opportunities where you can realize the value of the acquisition.

In addition to onsite visits, you also have data requests that are sent out the acquisition prospect, asking for information about the company. We try to make this process a bit more interactive than a simple checklist by having a conversation around what is important to the business. Information is typically shared in a virtual data room which keeps the files secure and ensures only approved viewers access the documents.

One important thing to remember is that you can never completely eliminate risk, no matter how thorough you are during due diligence. We have a saying “Due diligence will go on forever…if you let it!” At some point you have to call the question and decide if you’ll pursue the deal or not. You’ll never uncover 100% of the issues during due diligence, but that’s why you have attorneys draft reps and warranties that can protect you if there are things found out after the deal. On the other hand, you’ll never uncover 100% (or any) of the opportunities by just evaluating the company. You will have to execute the acquisition in order to realize the benefits.

Photo credit: Craig Sunter via Flickr cc

Acquisitions can transform your company’s growth trajectory and set you up for long-term success. You may choose to use acquisition because your organic growth has stalled and hiring additional sales people or investing in R&D will not not help you achieve your business goals. Acquisition is fast and opens the door to many new growth options by bringing on board resources like new technological capabilities and key employees,

Capstone Vice President Matt Craft had the opportunity to speak on “Growth through Acquisitions” on the Exit Readiness Podcast with Pat Ennis. Matt explains key drivers for pursuing acquisitions and how to maximize your potential for success.

In this episode Matt and Pat discuss:

  • Why you should considering using M&A to grow your business
  • How many companies you should look at before closing a deal
  • What to look for during due diligence
  • When to get advisors involved in the M&A process
  • Determining the best direction for your company
  • How long does an acquisition typically takes
  • And more!

Listen to the episode now.

In order to finalize and close the deal, there are a number of issues to consider including drafting a Letter of Intent, determining deal structure, and papering the acquisition agreement.

Learn how to navigate through the legal technicalities of mergers and acquisitions in our upcoming webinar Contemporary Legal Issues in M&A led by M&A attorney John McDonald. John is a partner at Troutman Sanders and his strategic M&A practice involves representing publicly-traded and privately-held buyers and sellers in M&A transactions across a broad range of industries, both domestic and cross-border. John received his JD in Law from Georgetown.

Key Topics:

  • Define a typical timeline for the M&A process
  • Describe the key principles and purpose of a Letter of Intent and Term Sheet
  • Define the key differences between a stock purchase, asset purchase and merger
  • Explain the basic contents of typical sections of an acquisition agreement, including Sale and Purchase, Reps and Warranties, Indemnification, Closing and Post-Closing

Date: Thursday, October 13, 2016
Time: 1:00 PM – 2:30 PM ET
CPE Credit available.

Upcoming Capstone Webinars

M&A U Webinar

  • M&A: From LOI to Close
  • Brand Integration: An Acquisition Challenge
  • Five Options for Growth
  • How to Pick Top-Notch Markets
  • Building a Robust Pipeline
  • “The First Date”: Contacting Owners and Successful First Meetings
  • A New Look at Due Diligence
  • Successful Negotiation Tactics
  • Tax Considerations in M&A
  • Mastering Valuation for M&A

View the complete series and register for the M&A U™ Webinar Certificate.

Photo Credit Francois schnell via Flickr cc

Just this Sunday, I received an email about the Ritz-Carlton Rewards and Marriott Rewards combining with Starwood Preferred Guest. According to the email and Marriott’s website, the three loyalty programs will be linked, but operate as independent programs. Marriott does not expect to merge the programs any time before 2018.

Marriott Rewards Email

Screenshot of the email announcement on combining the Ritz-Carlton Rewards and Marriott Rewards with Starwood Preferred Guest.

Marriott International first announced it would buy Starwood Hotels and Resorts Worldwide for $12.2 billion on November 11, 2015. The acquisition, which just received anti-trust approval from Chinese regulators, creates the largest hotel company with more than 5,500 owned or franchised hotels and more than 1.1 million rooms. In recent years, the hotel industry has faced competition from alternate lodging like Airbnb, making consolidations more attractive in order to save off competition and leverage economies of scale. Together Marriott and Starwood will generate $2.7 billion in fee revenue and are estimated to save $200 million in the second year post-closing.

Integration Planning Begins at the Start

Even prior to the deal closing, it’s important to begin integration planning. The Marriott and Starwood acquisition closed on September 23 and on day one, they rolled out their loyalty program integration. You can bet they already had this plan in their hip pocket.

The ability to successfully integrate largely depends on planning for and considering integration issues way back at the start of the entire acquisition process. Waiting until the day after the acquisition closes to begin thinking about integration. By then, you should already be executed your plan; it’s too late to begin planning.

The loyalty programs are just one small component of a larger plan to combine Marriott and Starwood. Even in this small piece of the plan, we see Marriott taking a phased approach by linking, but not combining Rewards with SPG. Marriott and Starwood both own a number of high-profile brand name hotels. Marriott faces the challenge of keeping Starwood’s loyal customers, many of who were upset about the merger, so keeping SPG running independently, rather than folding into Marriott Rewards, makes sense.

Determining how much to integrate depends on your strategic reason for acquisition. You may choose to have the seller integrate all of your processes, but other times you may choose to leave the seller alone. In other cases, you may even adopt best practices from the seller. You may also choose to adopt various levels of integration in different parts of your business. While Marriott has chosen to operate the loyalty programs independently, it’s likely it will combine departments like accounting and finance.

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The Guideline Public Company (GPC) Method is one of the more popular valuation methodologies because people often hear about it in the news or in presentations. This method identifies prices for individual shares of publicly traded companies that are subject to the same industry dynamics as the subject company (the company you are trying to value).

The valuation multiples calculated from these companies provide an indication for how much a current investor in the marketplace would be willing to pay for similar situated company that we are trying to value. For comparison sake we might be looking at things like similar businesses, sizes, geographic regions, and other operating characteristics.

Is the GPC Method Appropriate for Middle Market Businesses?

Depending on the size of the subject company, using the GPC method can be hard to implement realistically. Many middle market companies are better suited for the completed transaction method or the Discounted Cash Flow (DCF) approach. However, for some industries such as cloud or information technology, GPC data can be very robust and indicative of what’s going on in the industry, even for smaller-sized companies.

Selecting Guideline Public Companies

There are a number of resources both paid and free that we use to identify guideline companies.

  1. Cap IQ – This is a paid resources that provides research and analysis on publicly traded companies and overall market awareness. You’ll be able to use the Cap IQ database and tools to identify a list of companies that are similar to the one you are trying to value.
  2. Securities and Exchange Commission – The SEC has a search tool called EDGAR that allows you to search by industry code and provides a list of all public companies that characterize themselves as being in that industry. This typically generates a lot of results which you’ll need to narrow down in order to make sure the public companies are really comparable to the subject company.
  3. Yahoo Finance / Google Finance – These online tools provide key data on publicly traded companies. Once you find a few good comps for your subject, you can look up their competitors on Yahoo or Google Finance and start developing your list of GPCs that way.

How Many Companies Do You Need?

For a good GPC you need at least five public companies in your comp set; we prefer to have at least 10. It provides for a lot more analysis for the range of industry multiples. I’ve seen as many as 30 companies used, but bigger is not necessarily better. When using the GPC method, you really have to ask, “Is the subject company really comparable to these public companies?” And if this causes you to whittle down your comp set to five or six companies, that’s fine.

Photo Credit: Jorge Franganillo via Flickr cc

Ford announced it would acquire Chariot, a shuttle-van startup based in San Francisco, in order to expand beyond auto manufacturing and become a mobility company. This is the first acquisition by Ford Smart Mobility, which was established in March of 2016 in order to focus on “emerging mobility services.” Ford reportedly paid $65 million for Chariot.

Chariot uses 100 Ford Transit vans to offer rides to commuters along 28 routes in the San Francisco Bay Area. After the acquisition, Chariot will leverage Ford’s expertise in logistics and vehicle operations as well as use data algorithms to schedule trips in real time. Together Chariot and Ford plan to expand to at least five more markets. Ford already has shuttle programs in Kansas City, Missouri, and Dearborn Michigan. Ford intends to focus on other forms of transportation including bikes, dynamic shuttles and more, according to Jim Hackett, the chairman of Ford Smart Mobility.

Ford will also partner with Motivate to expand a bike sharing program in the Bay Area. Through the partnership, the program will grow to from 700 to 7,000 bikes and be renamed Ford GoBike.

Auto Manufacturing in Decline

To put it nicely, the outlook for auto manufacturing is pretty bleak. Competitors like Zipcar, Uber and Lyft and new technologies have disrupted the traditional automotive industry. Consumers today are buying fewer cars and option for public transportation or car sharing instead. The trend is not limited to millennials, in fact, according to a study published by University of Michigan’s Transportation Research Institute, fewer middle-aged adults in their 30s and 40s had driver’s licenses in 2014 than did in 1983. Ford is by no means the only car manufacturer to see that its market is shrinking. Earlier this year GM invested $500 million in Lyft to invest in self-driving car partnership.

How to Grow in a Shrinking Market

What’s your market outlook? While your business may be profitable today, if you’re in a shrinking market, future growth will be challenging. Faced with a declining market, now is the time to consider your options and next steps to ensure long term growth. You made focus on building your own solution organically or you may decide to partner with another company to rapidly gain access to a new market. In the case of Ford, the acquisition will allow the company to rapidly gain a foothold in the growing market of ride-sharing and alternate means of transportation.

Photo Credit: Mike Mozart via Flickr cc