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The Acquisition Trail

The acquisition trail is far from easy. There is a host of research which put the chances of a merger and acquisition success between 50 and 75 percent. Not great odds for the investment in money and time that can go into such business transactions.
I personally believe that it is a true privilege to have the opportunity to acquire a business that is often the vendor's life-work. If there is ever a time when "business is personal" then this is it. 

I have endeavoured to outline some of the core elements I view as key in ensuring a successful journey. Invariably, these will not be over-complicated but as always, it is the execution that can sometimes prove trickier... 

The core asset that is acquired is the goodwill or put quite simply, the client base. This asset is acutely fragile, and if mishandled during the purchase process or subsequent implementation, will quickly evaporate resulting in diminishing returns for both the vendor and the acquirer. This needs to be the key focus area and requires high levels of confidentiality prior to purchase, with a heavy customer communication focus post-completion, by both the vendor and the acquirer. After all, in many cases, the vendor will have relationships with some of their clients that have often been developed over many years.

To minimise risks for the buyer, it is important that the targeted acquisition fits its business model. CitySprint focuses on businesses that are 'asset-light' with for example, short property lease agreements.  These integrate well into the CitySprint business model. 

Culture is also a key consideration. Not so much in that the acquirer needs to quickly assert cultural control, but rather the acquirer is required to be flexible and dynamic enough to compliment the vendor's business. This is a significant component in the implementation, as the culture of the acquirer is not always necessarily the right one to get the best results.

Naturally the vendor's clients, staff and couriers sensitivity is high on the agenda and rightly so. This is why it is absolutely right to adopt an evolution not revolution approach. 

No one business is the same but a real value-added bonus is uncovering quality staff to whom you can offer new opportunities and challenges. It is always a great disappointment when you are unable to achieve this dynamic and in my experience a decisive factor in your success. 

This leads me onto the trust factor. 

The vendor will experience one of the most stressful challenges associated with the business to date. This event will be a culmination of all the blood, sweat and tears that built the business. 

Often the business is family run with employees and couriers having worked diligently with the vendors for years, and with some customers having become friends.  Compounding these emotions, will be personal or financial reasons for the sale. Dealing with this process pragmatically will demand that the acquirer works with the vendor in a professional and respectful manner, working out timeframes that fit both parties, and dealing with any concerns that arise responsively will provide assurance.   

A significant level of trust is required on both sides.  

I often get asked what I believe is the most important factor and my answer is always the same, experience. 

It really makes a difference dealing with an acquirer who has successful record in this area, not just because they will be competent in guiding the process and being proactive about the inevitable challenges ahead, but also because they will have a reputation that will enable the seller to reference. 

So, if you are planning to take this journey whether as a buyer or seller think very carefully. As an acquirer you need to have sufficient resource to undertake this effort without losing sight of your organic growth. As a seller, choose your acquirer wisely and be prepared to respond to a very intensive process that will require you to provide solid information to support your valuation expectations. 

The acquisition trail is an interesting one but to date, I have yet to find the scenic route! 


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