Acquisitional growth: many fast-growing firms are buying up the competition.

Four years ago, CEO Michael S. Fields created Open Vision Technologies Inc., a computer management firm in Pleasanton, California. Instead of starting from scratch, Fields built the firm by purchasing nine other companies, drawn from a pool of 160 companies of divisions of companies.

In this way, Open Vision was able to offer customers a suite of more than 15 software products and services. Last year, the three-year-old company, which has worked with over 1,000 government and Fortune 500 companies, posted roughly $29 million in sales revenues.

Open Vision is among that growing number of companies whose rapid expansion has been fueled through acquisition. Buying another business can fulfill several company needs, including broadening a product line, increasing distribution, providing access to international markets and enhancing technology. Some companies buy their smaller competitors simply to expand geographically.

However, "Increasing market share is just a part of it," says Fields. "You have to think about whether the products or distribution channels can be integrated."

There are some calculated risks. For starters, as the company doing the buying, you need to understand the value of the company being targeted for acquisition as a stand-alone entity. There also has to be a clear understanding of what added value is created by combining the two companies.

Earlier this year, Burrell Communications Group became the largest African American advertising agency when it acquired a full-service, white-owned agency, DFA Communications Inc., which specialized in direct marketing. Burrell got the nine-year-old agency's $25 million in annual billings, bringing its total tally to $115 million, as well as top-flight clients like Citicorp/Citibank.

You have to plan ahead as to how you will integrate the new entity into day-to-day operations. Due diligence is required. Otherwise, you might find that acquiring another company could actually compound existing management or operational problems. You have to give careful consideration to the fact that key employees could walk away from the business on both sides. Major clients or customers could also seek to do business elsewhere. Also, take into account how your company is going to measure the success, or lack of success, of the acquisition.

Some firms go outside their field when they make an acquisition. In this case, it's important to have someone on your team with experience or a keen understanding of that new industry.

Still, buying up the competition is not for everyone. Some companies are looking beyond straight acquisition and eyeing a joint venture.