Buying or acquiring a business: When strategy becomes critical
Buying or acquiring a business is a major milestone in any entrepreneur or business owner’s career. And it’s the one that invariably throws up the most challenges and concerns. With so many potential complexities to navigate, even ‘serial’ entrepreneurs and seasoned M&A veterans struggle to make the process of buying or selling work for them.
Management is not the same as strategic leadership
When it comes to striking the right deal, small- and medium-sized firms face a particular set of challenges. Whereas corporate acquirers can ringfence time and resources for business strategy, SME leaders often struggle to carve out thinking time away from their managerial responsibilities.
According to a recent Avondale survey for IoD members, a typical UK SME owner dedicates just 12 hours a week to develop their company, while one in five finds less than an hour for growth projects.
To neglect the strategic side of buying or selling a business is to compromise the success of the whole process, and a key reason why so many deals fail to deliver the expected level of value.
Careful planning is essential – it involves looking beyond the financials and understanding the finer details that make a deal stick. From intelligent marketing to post-merger strategy and finding ways to integrate varying people, cultures and business processes.
Avoid failure to launch with the right approach
Thinking through all of these variables and having the right strategy in place can be the difference between a successful transaction and one that fails to get off the ground or deliver value.
Take the owners of IT and Telecommunications Network Support provider, IntraLAN, whose initial attempts to sell their business returned a low offer and poor deal terms. With Avondale providing strategic advice, the owners were able to choose from five firm offers, with the deal closing at a high value in just three months.
With the right approach and preparation, the benefits of strategic M&A are there to be seen – for both buyers and sellers. Research by Bain & Company shows that companies expanding via frequent, small acquisitions over a number of years generate an additional 8-9% a year in total shareholder returns.
It’s the reason why more than 64% of participants in the 2018 IoD/Avondale survey would actively consider an acquisition as a route to growth.
Join us on 27th September for Avondale’s Strategically Selling or Acquiring a Business conference. Held in partnership with the IoD, this unique event promises to provide company owners and other stakeholders with fresh, strategic insight into selling or acquiring a business.