M&A vs. Organic Growth: Which Strategy is Right for Your Business?

Key Takeaways:

• Two paths to growth: M&A offers speed and scale; organic growth builds control and long-term stability.
• Trade-offs matter: Nearly 60% of acquisitions fail to create shareholder value (HBR), while organic growth is slower but often more sustainable.
• Best of both worlds: Many companies succeed by blending organic expansion with targeted acquisitions.
• Your choice depends on: timeline, available capital, market conditions, and long-term goals.

Many experts and business owners would agree that to have a sustainable business, growth should be part of the business’ strategy. But what kind of growth should a company focus on? Growing a business requires deliberate choices about expansion, and two primary paths often stand out: mergers and acquisitions (M&A) and organic growth. Each approach carries distinct advantages and challenges, and the right choice depends on your goals, resources, and risk appetite.

At PCE Companies, we’ve guided many business leaders through both strategies - and often, a combination of the two. Here’s how to evaluate which option fits your business best.

What is M&A Growth?

Growth through mergers and acquisitions involves the purchasing or combining with another business to instantly expand your company’s geographic footprint, capabilities and/or service offerings, or customer base.

Benefits of M&A

• Speed to market: Acquiring a company gives you instant access to new products, customers, or regions, far faster than building from scratch.
• Economies of scale: Combining operations can create cost efficiencies, enabling you to compete more effectively.
• Market share boost: Purchasing a competitor can quickly grow your presence in your industry.
• Access to talent and IP: Acquisitions often bring in specialized skills, additional workforce, intellectual property, and other niche resources you may not have internally.
• Boosts existing employee morale. Employees typically get excited about the new opportunities an acquisition can bring and get excited to be a part of either the initial phases or the integration phase. Adds complexity and variety to their existing roles.
  
  

Challenges of M&A

• High upfront investment/cost: M&A typically requires significant capital and financing both initially and ongoing.
• Integration risks: Cultural differences, misaligned processes, and conflicting goals can derail success and return on investment.
• Regulatory hurdles: Larger deals often face compliance and antitrust reviews which can delay the process and add additional costs.
• Potential for overpaying: Overestimating synergies or growth potential can result in costly mistakes as well as underestimating potential liabilities and costs associated with the newly acquired business.
  
  

Notably, Harvard Business Review research analyzing 2,500 M&A deals found that more than 60% destroyed shareholder value, underscoring the high stakes and prevalence of failed acquisitions in practice.

Understanding Organic Growth

Organic growth focuses on increasing revenue and profits through internal effort - such as revamping marketing initiatives, improving and/or inventing new products, expanding to new markets, or building stronger customer relationships without making an acquisition of another company.

Benefits of Organic Growth

• Sustainable expansion & control: Organic growth builds consistently on your existing foundation where the existing business can control speed and direction, often leading to greater long-term stability.
• Lower capital risk: You can typically scale without massive upfront acquisition costs or debt; costs to expand organically can be smoothed out gradually as they are incurred and can oftentimes pay for themselves.
• Cultural consistency: Your company maintains its identity and values without the risk or challenges of blending with another organization.
• Customer loyalty: Focusing on improving offerings may strengthen brand trust and repeat business. Being innovative can keep customers engaged and excited about your future.
• Employee engagement/retention: Having organic growth initiatives keeps employees challenged and engaged as they feel a part of the growth and can reap the benefits of its success.  
  
  

Why It Matters

McKinsey’s analysis of 550 U.S. and European companies over 15 years found that, for comparable revenue growth, firms leaning more on organic growth delivered higher shareholder returns than those dependent solely on acquisitions (McKinsey & Company).

But the story doesn’t end there. M&A can create tremendous value when it is used strategically — to accelerate scale, enter new markets, or strengthen capabilities — especially on top of a solid organic growth platform. The most successful companies often balance the two, blending the stability of organic growth with the speed and scale of acquisitions.

Challenges of Organic Growth

• Slower pace: Building new products, hiring talent, or entering markets takes time and focus. Slow and steady can sometimes be frustrating and the initiative can get burdensome and canceled before any benefits can be realized.
• Resource limitations: Growth relies heavily on what you can generate internally both monetarily and through human capital rather than external assets.
• Market competition: Competitors using acquisitions may outpace your growth trajectory.
• Scaling difficulties: Stretching existing operations too quickly can strain teams and systems.
  
  

Deciding Between M&A and Organic Growth

Choosing between M&A and organic growth is not just a financial decision, it’s a strategic one. Here’s a framework we use at PCE to help clients assess their growth path:

Real-World Insight: A PCE Client Story

A PCE client in the business services sector had slowly but consistently grown through organic means for over a decade. With a saturated regional market and increased competition, the leadership team turned to PCE to explore M&A.

At PCE, we identified a target that was a fit for their strategic goals and company culture and ultimately executed the acquisition of a niche competitor in an adjacent state. The results were immediate:

• 2x EBITDA growth within 18 months
• Entry into three new geographic markets
• Strengthened talent bench and customer base

The client retained key leaders from the acquired firm and implemented a structured integration plan while preserving culture and gaining scale. Today, the company is positioned for a strategic exit within the next 24 months at a significantly higher valuation.

Expert Insight

At PCE, we see business owners delay strategic M&A discussions, even when acquisitions could unlock growth barriers that internal efforts cannot overcome.”  

This hesitation is common: Deloitte’s latest CFO survey found that 37% plan to make M&A a substantial part of their growth strategy, while 34% expect deal activity to increase in the next year.

At PCE, this is what we specialize in, helping you take the steps needed to grow through M&A and supporting you throughout the process.

Frequently Asked Questions

1. Can I combine M&A and organic growth?

Yes. Many successful companies do both. You might grow organically to a certain size, then pursue acquisitions to enter new markets or build scale before a sale.

2. When does M&A make more sense than organic growth?

When speed, scale, or market access is critical. If your industry is consolidating or competitors are growing aggressively, M&A might be the only way to keep pace.

4. How do I fund an acquisition?

There are multiple options: cash reserves, debt financing, private equity, or seller financing. PCE can help structure deals based on your capital strategy.

5. How do I know if my business is ready for M&A?

It starts with strategy. Are your financials solid? Are your processes scalable? Do you have the bandwidth to support the pre-closing and post-closing integration processes? Do you have a post-acquisition integration plan? PCE guides clients through acquisition readiness assessments every day.

Strategy, Not Just Scale

Both M&A and organic growth can produce sustainable success, but the best path forward hinges on your strategic priorities. Consider where your company is today, what your long-term vision is, and how much risk you’re prepared to take. For many business owners, the strongest strategy lies in thoughtfully pairing organic growth with targeted acquisitions, striking a balance that fuels both speed and stability. At PCE Companies, we help businesses assess growth opportunities in context, whether you are building for the next decade or preparing for a successful exit.

Nicole Kiriakopoulos

Nicole Kiriakopoulos is a Director at PCE, supporting clients through buy-side and sell-side M&A transactions. With nearly 20 years of experience and a focus on facility services, she has advised on more than 100 deals totaling over $1 billion in value.

Read Nicole's Full Bio