As an Adobe Systems investor, I continue to be pleased by how the company keeps its shares moving up. So far in 2018, Adobe's total return to investors is nearly 36 percent, according to Morningstar.

A part of Adobe's success is its ability to acquire and integrate companies that make products that its customers want to buy. The most recent example of this is Adobe's May 21 announcement that it would spend $1.68 billion to acquire e-commerce software maker Magento Commerce.

Because it keeps beating expectations for revenue and profit growth and has a solid strategy for sustaining that growth. Adobe offers a great template for leaders seeking to achieve sustainable growth.

Before taking a look at how Magento's acquisition provides a roadmap for growth, let's look at how acquisitions fit into the bigger picture of corporate growth.

That bigger picture can be discerned by analyzing whether the company has carefully constructed what I called a growth trajectory in my 2017 book, "Disciplined Growth Strategies."

Such a growth trajectory chains together some or all of five growth vectors:

  • Customer groups (current or new),
  • Geography (current or new),
  • Product (built or acquired),
  • Capabilities (current or new), and/or
  • Culture (current or new).

What does this have to do with Adobe? Back in 2011, Adobe radically rejiggered its growth trajectory by adding a new capability -- by shifting from selling software in a box to supplying its software as a service in the cloud.

As I wrote in 2015, this self-disruption hurt profits in the short run but has enabled Adobe to boost the lifetime value of its customer relationships. Adobe also grows by acquiring and integrating companies that make products that its customers want to buy. In such cases, Adobe concludes that buying is better than building.

Since changing its growth trajectory, Adobe's stock has risen from around $30 to nearly $240 a share. 

Adobe's acquisition of Magento Commerce passes the four tests for successful acquisitions about which I wrote in Disciplined Growth Strategies.

1. The market is attractive.

The e-commerce platform market is large and growing gradually. In 2017, revenues totaled about $4 billion and are expected to grow at a 3.3 percent annual rate to $4.7 billion in 2021, according to Statista.

2. Adobe/Magento will enjoy a competitive advantage.

Competitive advantage flows from offering customers more value than competitors do.

And one way to gauge what investors think about Adobe's acquisition is to look what happened to shares of e-commerce software rival, Shopify after the deal was announced -- they plunged nearly 5%, according to Morningstar.

Perhaps that drop is due to fear that Adobe will take customers from Shopify. Magento -- which had 16% of the e-commerce platform market to Shopify's 13 percent, according to Aheadworks, will add to Adobe's cloud for businesses enabling Adobe to win more customers.

According to a statement from Brad Rencher, Digital Experience executive at Adobe, "Adobe is the only company with leadership in content creation, marketing, advertising, analytics and now commerce -- enabling real-time experiences across the entire customer journey."

CRM expert Brent Leary told TechCrunch that Magento will fill a hole in Adobe's Experience Cloud. According to Leary, "Now they have an offering that allows them to close the loop with consumers, who are able to finalize a digital transaction that started online with digital marketing tools Adobe already offered."

3. The price is not too high.

Private equity firm Permira acquired Magento for about $200 million in November 2015 from eBay which bought Magento in 2011 for about $180 million, according to TechCrunch. The Adobe deal should quintuple Permira's investment.

Did Adobe overpay? Magento's 2017 revenues were $150 million, according to Adweek. And applying Shopify's Price/Sales ratio of 18.8 to those sales, would yield a value of $2.8 billion -- which is far less than what Adobe paid.

And since Magento's product is being used by enterprises like Coca-Cola, Warner Brothers Music, Canon, and Nestle, it should not be too difficult for Adobe to sell the product to its enterprise customers.

 And that additional revenue may ultimately offset the price Adobe paid.

4. The integration should go well.

One reason that Adobe may be able to recoup the purchase price is that Adobe is keeping Magento's CEO who seems pleased to be joining Adobe.

Mark Lavelle, CEO, Magento said in the statement, "Adobe and Magento share a vision for the future of digital experiences that brings together Adobe's strength in content and data with Magento's open commerce innovation. We're excited to join Adobe and believe this will be a great opportunity for our customers, partners and developer community."

To be sure, this acquisition will not have a huge effect on Adobe -- which generated $7.3 billion in 2017 revenue. But it is a reminder that Adobe's ability to grow through acquisitions is well-honed and likely to help supplement its other avenues of growth.

If your company can follow Adobe's growth trajectory -- particularly making sure your acquisitions pass these four tests -- your company will be on a more sustainable path to growth.