Build, buy or ally

Capron and Mitchell found that organisations tend to favour one mode by habit — some build everything, some acquire by reflex — and that the habit is costly. Their sequence of questions asks whether existing resources are close enough to build from, whether the resource could be obtained by contract, how close the relationship with its owner would need to be, and whether an acquired business could realistically be integrated. The answers point towards building, borrowing through a contract or alliance, or buying.

Haspeslagh and Jemison added that acquisitions create value after the deal, and that the integration approach has to match how much the acquired business depends on its autonomy. This module owns the mode of growth for the business as a whole and, where that mode is acquisition, the case, the scope of due diligence and the integration plan. Where growth should come from is decided under Direction of growth. Closing a single capability gap — deciding how the organisation comes to hold one particular competence — is a separate question, settled under Building in Core competencies; if that route ends in buying a company, the acquisition work itself is carried out here. Once an alliance is chosen, selecting and running the partner belongs to Partners in the Business Core. The valuation follows the method set out under Investment appraisal, which also holds the later review of whether the acquisition delivered.