Patrick Gallagher, CEO of CitySprint, explains how to complete a smooth and successful acquisition.
Acquisitions are important to the UK economy – they are an indicator of the confidence and appetite for expansion of business leaders. It was concerning, therefore, that statistics released by the Office for National Statistics (ONS) in early June 2014, showed that domestic mergers and acquisitions (M&A) activity in the preceding quarter was at the lowest level since records began in 1969.
They may be a significant aspect of the business landscape, but acquisitions are far from easy. There is no one size fits all approach and each acquisition presents its own opportunities and challenges, requiring commitment and dedication to succeed. From our experience, there are, however, steps that can be taken to help minimise risks and foster the best chance of a smooth transition of services.
Demonstrate your value
Customers are often the primary asset acquired – and they are also amongst the most fragile element of any company. A buyer must be very conscious of the importance of being perceived to be a friend and champion of the business.
Demonstrating the value you can add to the experience of existing customers is therefore vital to ensuring an acquisition is successful. This could be anything from better technology or a more comprehensive service, to an enhanced product offering.
Look for the right “fit” and know your industry
It’s important that you’re able to see beyond a fantastic client base or other attractive features of a prospective vendor, and assess whether its business model can viably be integrated into your own. If not, the deal may not be advisable.
In CitySprint’s case, for example, we work in an industry that naturally experiences peaks and troughs. In order to remain nimble and flexible, we’re careful to select businesses with few fixed costs for acquisitions.
This will be a stressful time for the vendor, so it’s important that, as a buyer, you are diligent and empathetic, and adopt an “evolution not revolution” strategy. Only when you demonstrate that you are flexible and dynamic enough to complement a vendor’s business and help to secure a profitable future, will you gain the trust pivotal to successfully closing a deal.
If you’re considering expansion through acquisition, it’s important that both parties are prepared for the journey ahead. It can be long, with many twists and turns, but supporting each other throughout is key to maintaining “business as usual” – and going on to achieve bigger and better things together.