Fundamental Glossary / Growth Metrics
Inorganic Growth
Growth that comes from buying other businesses, books of customers, or capacity, rather than from the old operations.
Formula
Reported revenue growth - organic revenue growth, when the company splits them. Otherwise, the sales of businesses acquired during the period.
What it means
Inorganic growth is real sales. The customers exist. It is just sales the company paid to own, rather than sales it won with the assets it already had.
The price of that growth is the cash or shares issued, and the goodwill that appears afterwards.
How to read it
Judge inorganic growth by the return on the capital paid, a few years later, not by the year-one jump in revenue. A deal that lifts sales and sinks ROCE was an expensive way to get bigger.
What to watch
Serial acquirers can show a decade of growth that stops the moment the deals stop. Separate the two engines before you pay a growth multiple for both.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.