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The Growth and Acquisition dilemma-choosing your path

RidgetownMergers & Acquisitions The Growth and Acquisition dilemma-choosing your path

The Growth and Acquisition dilemma-choosing your path

Can you really hit your growth targets without an acquisition strategy?

Most companies I work with initially assume that they can hit their growth aspirations via traditional, organic growth methods. My own experience, however, finds this approach to be profoundly self-limiting, with company owners rarely hitting their desired growth goals without some growth by acquisition. Most companies on an organic growth trajectory will struggle to hit 5-15% of growth. Growth by acquisition can boost growth much more quickly (not untypically 20-40% and in some industries) making acquisitions look a cheaper option, often less complex and less risky than running a full sales team chasing down new business.

The Acquisition Bonus

The reasons why a company owner might want to exit their business are vast and diverse. Businesses that trade over many years tend to accrue deep sector knowledge, and expertise in their staff, intellectual property, varied physical assets and products, and the loyalty of their customer base. It is always good to look beyond he Balance Sheet for the true, unearthed value of the business and critically, that is what you should be doing. Acquiring a business allows you entry into much broader markets, uncovers cross sell opportunities and so much more. Truly capitalising on all this new value takes skill, experience and often specialist advice.

Preparing to Acquire a Business

A successful business acquisition depends on many things:

  • Indepth industry research and analysis
  • Alignment of the business ideologies, with potential focus on the ethos of the new staff
  • A carefully thought out integration strategy, with a well-managed post acquisition migration team for typically a 6 month period
  • The timing – are you really ready to acquire? Is your own business resilient enough to withstand a very distracting process? Do you have the key management to implement the agreed plan?

Ill-advised or thought out acquisitions can go catastrophically wrong and be very costly. For this reason, engaging with an experienced M & A expert is an investment in your business’ successful growth, during this time of intense change. This helps mitigate your risk, ensure that you enter the process well prepared and understand the potential pitfalls and limiting any downsides.

Author: Philip Waxman is an experienced corporate finance and strategic consultant. As a Chartered Accountant, he has been instrumental in supporting growth plans, raising finance and investment and undertaking M&A assignments for a number of growing businesses including a Pilkington Plc subsidiary and a Private Equity backed technology business.

Talk to Philip today to kick start your business growth plans – 0330 223 5030 or email on p.waxman@ridgetown.co.uk

 

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