Strategic opportunism

Abstract

Purpose

Successful growth strategy has a lot to do with careful preparation to identify attractive markets and new sources of customer value and competitive advantage. If the plan for achieving growth includes acquisitions, then we also have to consider company valuations and the availability of suitable acquisition targets. A challenge for many companies is knowing when and how much to adapt their strategy in the light of specific acquisition opportunities that become available. If a poorly‐performing competitor becomes available at a modest price should we try to adapt our strategy to take advantage of the opportunity? If the price for an attractive acquisition is bid up beyond expectations should we walk away or try to find a way to pay what the market says the company is worth? In this article, Stuart Jackson shows how successful acquirers combine both strategic discipline and a willingness to react quickly to market opportunities, an approach he calls strategic opportunism.

Design/methodology/approach

In this article, Jackson draws lessons from leading private equity investment groups, some of whom excel at this approach. To illustrate his points, Jackson uses the example of Snapple Beverage Corporation, a company that has been acquired four times since 1992, twice by private equity investors Thomas H. Lee and Triarc, and twice by corporate owners Quaker Oats and Cadbury Schweppes. Each owner brought different organizational priorities and different capabilities to add value to the business.

Findings

There is a huge disparity of returns for companies investing in the same business during different periods. The clear implication is that for a successful growth strategy involving acquisitions, companies need to get both the strategy and the timing right. This may require adjusting the strategy in light of opportunities that arise, and taking steps to align organization priorities and incentives.

Originality/value

By comparing the very different acquisition approaches of corporate and private equity investors, the article provides valuable insight into how private equity investors are often able to deliver strong performance even without the benefit of substantial synergies, while corporate acquisitions often fail to deliver attractive shareholder returns.

Citation

Jackson, S.E. (2008), "Strategic opportunism", Journal of Business Strategy, Vol. 29 No. 1, pp. 46-48. https://doi.org/10.1108/02756660810845705