a group of people discussing something

Expanding Your Acquisition Parameters

By Jeremiah Hughes

February 13, 2024

Expanding Your Acquisition Parameters: Over 50 Examples of Companies that Excel in Wildly Different Products & Services

As a merger and acquisition advisor, I constantly strive to unlock untapped value for my clients; value that is unrealized and often overlooked. While traditional M&A strategies often focus on consolidating core business areas, I've increasingly found myself advocating for a bolder approach: looking beyond the core business to explore acquisitions in unconventional industries and markets my clients may not have ever considered before. Let me explain why this sometimes counterintuitive strategy deserves a closer look.

The Power of Peripheral Vision: Why Expanding Your Acquisition Horizons Could Be Your Next Big Win

Many companies hesitate to stray from their core business, citing concerns like integration challenges, cultural misfits, and brand dilution. It's understandable - sticking to what you know, and "staying in your lane," feels like the safe and conservative approach. But safety harbors stagnation. The world is in flux, and clinging to the familiar might leave you vulnerable to disruption from agile competitors who dare to explore uncharted territories.

Now, I'm not advocating for reckless leaps into the unknown. Instead, I'm proposing a strategic expansion of your investment parameters. Consider these benefits:

  • Access to Untapped Opportunities: Expanding your acquisition search allows you to identify innovative technologies, untapped markets, and complementary skillsets beyond your immediate market and field of vision. This opens doors to potential synergies and growth avenues you might have otherwise missed.
  • Enhanced Differentiation: Think about it - who wouldn't be intrigued by a company that breaks the mold with a bold, strategic acquisition? It sets you apart from the pack and can spark exciting new possibilities for brand development, market expansion, and customer engagement.
  • Future-Proofing Your Business: By diversifying your portfolio with complementary and diversified business services and products, you mitigate risk and become more resilient to industry-specific downturns. It's like investing in a diverse stock portfolio - spreading your bets for long-term stability.

So, how do you translate this into action?

  • Challenge Assumptions: Start by questioning your preconceived notions of where growth lies. Encourage open-minded brainstorming sessions with diverse teams and advisors to spark unconventional ideas.
  • Embrace Data & Disruption: Leverage market research, industry trends, and competitor analysis to identify potential targets outside your core. Look for companies pioneering disruptive technologies, a broad service/product offering to an existing customer base, or addressing emerging customer needs.
  • Find the Right Partner: An experienced investment banker with a generalist background with a peripheral vision and proven track record in unconventional M&A can be your guiding light. Navigating the complexities of cross-industry and cross border deals and experience to ensure a smooth integration process goes a long way with this strategy. Sometimes, venturing beyond traditional boundaries can lead to remarkable success.

Breaking the Mold, Forging Your Own Path

Forget playing it safe! In today's dynamic business landscape, standing still can mean falling behind. That's why forward-thinking companies are increasingly embracing diversification: venturing beyond their traditional offerings to explore new products, services, and even completely different industries and markets.

But where do you start? Are you unsure how to expand your business while maintaining its core strengths? The answer lies in finding inspiration from those who have already paved the way.

This blog post will unveil over 50 groundbreaking examples of companies across various industries who successfully diversified their product or service offerings into wildly different markets. From tech giants to household names, each story showcases the power and possibilities of venturing beyond the familiar. The following are some of my favorite examples of companies pushing the envelope in diversification:

  1. Yamaha has earned accolades in both the realms of musical instruments and motorbike engineering. Starting out designing piano frames, their proprietary vacuum casting process created such strong frames, they realized it would be applicable to motorbike engine components.
  2. Michelin, globally recognized for its tire manufacturing, expanded its influence with the initiation of the prestigious Michelin Star Guide, setting the benchmark for excellence in the restaurant industry.
  3. Ball stands out for its production of glass jars as well as cutting-edge military satellites, illustrating its proficiency in both consumer and defense sectors.
  4. Lamborghini, synonymous with high-performance supercars, also boasts a history in tractor manufacturing, offering a unique blend of luxury and utility in their product portfolio.
  5. The Guinness World Records, conceived by the Guinness Brewery, not only serves as a record-keeping entity but also originated as a clever solution for patrons to settle bar bets, adding an intriguing dimension to its overall business strategy.
  6. Peugeot, a distinguished car manufacturer, extends its craftsmanship to include world-renowned kitchenware, exemplified by their exceptional pepper mills, showcasing a seamless blend of automotive and culinary expertise.
  7. Glock, initially a curtain rod manufacturer, pivoted successfully to produce the world's most popular semiautomatic handguns. In a surprising turn, they've entered the market of horse semen, displaying an unexpected diversification strategy.
  8. Coors, known for its beer, entered into the production of ceramic and porcelain components in the medical field when prohibition caused them to think outside the box. Their commitment persisted even after the resurgence of beer, highlighting adaptability and strategic business decisions.
  9. Texas Instruments, famed for calculators, also manufactures the Javelin Anti-Tank Weapons System, demonstrating prowess in both consumer electronics and defense technologies.
  10. Aerobie, the creator of the Frisbee, ventured into the coffee market with the AeroPress coffee maker, showcasing innovation across recreational and culinary domains.
  11. Samsung's evolution from a grocery trader and noodle producer to a leading manufacturer in smartphones, televisions, and semiconductors reflects a remarkable shift in industry focus and technological innovation.
  12. Hitachi, which has become a global conglomerate, engages in an extensive array of sectors including consumer loans, renewable energy, trains, railways, and heavy equipment, showcasing a diverse and far-reaching influence.
  13. Bic, well-known for their lighters, complemented its product line with pen manufacturing, demonstrating expertise in both disposable consumer goods and writing instruments.
  14. Honda, which started as a bicycle manufacturer, added an engine and became a motorcycle and automobile giant. Also, they've diversified into a variety of markets and even sells soybeans in Japan sourced from Ohio, providing a surprising link between the automotive and agricultural sectors.
  15. Rolls Royce, an iconic brand, manufactures not only luxury cars but also jet engines, establishing a presence in both automotive and aviation industries.
  16. Swarovski, famous for crystal figurines, also excels in producing high-quality rifle sights, showcasing precision craftsmanship across industries.
  17. Shimano, a leading brand in bicycle components, extends its expertise to include fishing gear, catering to a broader spectrum of outdoor enthusiasts.
  18. Red Bull, synonymous with energy drinks, has a massive presence in the motor sports industry, showcasing a strategic diversification well beyond the beverage industry.
  19. McDonald's, often associated with fast food, derives a majority of its profit from real estate, adding a unique dimension to its initial business plan.
  20. Nintendo, initially a playing card manufacturer, transformed into a global player in the video game industry, exemplifying adaptability and innovation.
  21. Mars candy, known for its sweets, diversified into the pet food market, illustrating a broadening of its consumer product offerings.
  22. Nokia, once a factory for rubber boot manufacturing, evolved into a telecommunications giant, demonstrating a significant shift in focus and technological advancements.
  23. Progressive insurance, besides its core business, has amassed a notable contemporary art collection since 1974, showcasing a unique corporate engagement with the arts.
  24. Husqvarna's journey from musket manufacturing to sewing machines and, currently, gardening equipment and motorbikes reflects a rich history of adaptation and diversification.
  25. Brother, recognized for printers, extends its manufacturing prowess to include sewing machines, emphasizing a diverse product line catering to varied consumer needs.
  26. Maytag Blue Cheese, founded by the grandsons of a washing machine company founder, unveils an unexpected connection between food and laundry appliances.
  27. Amazon, initially a book retailer, has evolved into a global juggernaut in cloud computing and e-commerce, reshaping the landscape of online retail and technology service sectors.
  28. Liebherr, renowned for heavy equipment, extends its expertise to include refrigerator manufacturing, showcasing a broad spectrum of engineering capabilities and differentiated end markets.
  29. Lutron, a lighting fixture manufacturer, not only invented the dimmer switch but also played a role in introducing Asian pears to the United States.
  30. Ikea, synonymous with furniture, surprises with sale of over one billion meatballs per year, showcasing a successful foray into the food industry leveraging their core business operations.
  31. Remington, initially a typewriter manufacturer, diversified into firearms due to their expertise in high tolerance manufacturing components, exemplifying a strategic business pivot based on their operational expertise.
  32. Purolator, recognized for oil filters, also operates a highly successful armored car service, showcasing an unexpected combination.
  33. Cool Water, one of the best-selling fragrances, is produced by Davidoff, a premium cigar company.
  34. American Standard, renowned for dominating the toilet manufacturing sector, also manufactures furnaces, demonstrating expertise in both plumbing and heating technologies.
  35. Toyota, a leading automobile manufacturer, originated as a loom manufacturer and continues manufacturing industry-leading weaving machinery today.
  36. Pittsburgh Plate Glass, known for their commercial glass products, expanded its production to include paint and other chemicals, showcasing a comprehensive approach to industrial materials.
  37. Pringles, initially intending to make tennis balls, found success in the potato chip market, revealing the unpredictable nature of product development.
  38. Bridgestone tires, besides its main product line, excels in manufacturing high-quality golf balls, demonstrating expertise in both automotive and sports equipment.
  39. Hermes, a high-quality saddle maker, has evolved into a global fashion icon, showcasing a journey from top notch craftsmanship to luxury apparel.
  40. Suzuki, known for motorcycles, diversifies into the production of clarinets, revealing a broader commitment to both recreational and artistic pursuits.
  41. Wire and Plastic Products, one of the world's largest advertising agency conglomerates, showcases a global influence in various industries, emphasizing their vast and diverse portfolio.
  42. Manitowoc, a company specializing in massive construction cranes, also manufactures commercial ice machines, illustrating a combination of heavy machinery and commercial appliance production.
  43. Thyssen Krupp, recognized for elevators, constructed one of the world's largest excavation mining cranes, the Bagger 288, demonstrating engineering prowess across diverse applications.
  44. Kaiser Permanente, initially involved in ship and steel production during WW2, transformed into a healthcare provider serving over 12.6 million people, illustrating a significant shift in focus and societal impact.
  45. Moog, famous for electronic synthesizers, also manufactures servo hydraulic actuators for aerospace applications, showcasing a broad range of precision engineering capabilities.
  46. Saab, once an automobile manufacturer, transitioned to producing fighter jets and submarines, showcasing a strategic shift into defense and aerospace.
  47. Tesla is famous for electric cars and also ventures into solar energy solutions and space exploration.
  48. General Electric was initially an electric production company, and expanded into diverse areas such as aviation, healthcare, and renewable energy.
  49. Caterpillar is recognized for construction and mining equipment, also offers financial products, insurance and now a wide array of consumer products.
  50. Dyson, initially focused on vacuum cleaners and household appliances, are now pioneers in electric vehicle technology.
  51. Wrigley started as a soap manufacturer, and then baking powder company before finding sweet success in the chewing gum business.
  52. LG (Luckey Goldstar) initially was founded as a chemicals and plastics company before getting into consumer electronics, home appliances, and telecommunications.
  53. Wurlitzer was initially a manufacturer of stringed instruments and then shifted its focus to producing jukeboxes, becoming a household name.
  54. Play-Doh was originally designed as a wallpaper cleaner in the 1930s and then transformed into a popular modeling compound for kids.
  55. Western Union was initially a telegraph company and then transitioned into a financial services company specializing in money transfers.
  56. Hill-rom manufactures both hospital beds and was the pioneer of the mass production of metal caskets.

Diversification isn't just about throwing darts at a map of industries. It's a strategic dance, requiring careful planning, expert guidance, and strategic partners who can help navigate the complexities of merging different worlds.

I challenge you to think outside the box. Leverage all you've built to consider the talent and expertise you have to venture into unfamiliar territory with the same skills and expertise applicable to vastly different applications.

Posted by Jeremiah Hughes.