OK. So you have decided to embark on the M&A journey. It is clear that your business has the capacity, tight processes and talent to take on the challenge of scaling at pace, perhaps even doubling overnight. So how do you find the perfect business to acquire? Here are a couple of tips from our deals team.
Start locally and consider your competitors. The companies you compete with in your market a great place to start. You will likely know some of their customers, how they operate and what their strengths and weaknesses are. You may even have relationships with key management. Competitors are likely to be the acquisition targets you understand best and there may be strategic benefit of acquiring them too.
Sector networking is a great place to find deals. Getting involved at conferences, sector expos and networking events has two key benefits. Firstly, you will be plugged in to the latest developments such as M&A trends in your sector, who may be looking to sell their business and who is competing with you for deals. Secondly, you can raise your profile as a buyer – letting the community know that you are on the acquisition trail can help attract financing, advisors and prospective sellers.
Identify where you can add value. Some businesses look great – slick websites, modern branding and a great reputation. But don’t dismiss companies which fly under the radar. You could be able to purchase a great customer book and operation while keeping the upsides of successful marketing for yourself. While most buyers are chasing high profile businesses, identifying where you can add value to a less attractive acquisition target can be hugely rewarding.
Have specific criteria but be ready to make a compromise. While it is important to be discerning and only pay for quality businesses, there is never an acquisition which will perfectly match all your criteria. Companies are unique and each will have a different approach to customers, operations, marketing and employees so if you are not prepared to compromise on some of your criteria it may be difficult to find an acquisition.
Differentiate yourself as a buyer. The price you pay is hugely important for sellers but there are other things to consider too. Being transparent on how you will treat the business post acquisition is often of huge importance to sellers who care deeply about their customers, employees and leaving a behind a legacy.
Work with dealmakers. M&A is a hugely challenging processes from origination through to completion and integration. Business owners may often consider working with advisors and investors who can assist with the deal process. At Fordhouse, we collaborate with SME owners to rapidly scale their businesses through acquisition and we are able to provide financing, deal expertise and crucially integration capabilities to make the deal worthwhile.