BUSINESS GROWTH THROUGH INNOVATIVE ACQUISITION & DIVERSIFICATION STRATEGY

Acquisitions, one of the best speed strategies in the business toolkit

SITUATION

In this rapidly evolving marketplace, there has never been a more crucial time for media and telecommunications companies to innovate, retool, and rethink their growth strategy – fast. Enter acquisitions, one of the best speed strategies in the business strategy toolkit. Acquisition can help a company get to market with a new business line faster; position itself in a new, adjacent business; or simply increase its competitive mass — all of which aim to drive long-term viability. 

So what do you do when you are literally on an island and you have cornered your primary market? Hawaiian Telcom, a leading telecommunications company, needed to diversify to grow in its limited marketplace, but was there a new adjacent market to enter? If yes, was there enough unfulfilled demand to create a business from this new market on the islands?

THE SYNAPTIC SHIFT

Capto’s SYNAPTIC approach got its start in Mergers & Acquisitions. We have long recognized the need for a methodology that meets the high demands of M&A clients by providing Insights-as-a-Service to drive confident, timely investment decisions. When applying our thorough, fast and innovative focus to the M&A process, companies are empowered to make smart, appropriate investments with reduced risk.

As this client weighed a buy vs. build decision for entry into the cloud business, Capto conducted a deep dive into the demand-and-supply side of the acquisition strategy to confirm a market gap that warranted the significant investment. Our research showed the government customer base alone could support expansion into data centers.

Capto recommended a dual-path execution for the data center strategy. Hawaiian Telcom had the capital to build its own center, but by the time it was completed, the company would miss key market entry timing for the a large potential client. Other large media and telecom players were looking to engage in a similar strategy, so the first to market would have a clear advantage. Hawaiian Telecom needed to buy first to block competitive threats, and then build.

After a target company was identified, Capto’s technical due diligence uncovered serious power issues that would mean only short-term viability. The acquisition would have to be an interim solution in the buy-and-build strategy. With Capto’s guidance, Hawaiian Telcom moved aggressively, acquiring the target to quickly enter the market, immediately began plans to expand, while exploiting near term opportunities with the acquired provider.

RESULTS

Hawaiian Telcom’s decision to acquire interim capabilities allowed the telecom company to be first-to-market and create barriers for new entrants. The new data center is up and running, the government market is secure, and the company is maximizing the opportunity to dominate this new market for the long term.

“Capto was instrumental in helping think through our strategic options when entering the data center services market and focusing on the key elements to drive our success.”

– Eric Yeaman, CEO, Hawaiian Telcom