Companies that successfully grow through repeated acquisitions make their efforts almost look easy from the outside. As a former corporate buyer, I can tell you that under that smoothly gliding swan, there is a coordinated amount of effort that goes into designing and executing a value-creating acquisition program. Successful acquirors commit senior management and dedicated M&A team members. Successful M&A teams often have extensive experience in the industry (not necessarily in finance or M&A). This group uses acquisitions to support the company’s strategic plan and will decide when to “buy versus build” to grow whether that be to expand geographically, expand their services, buy growth in their markets or some other motive.) Once the decision is made that the best way to achieve a goal is through acquisition, they will plan, execute and integrate companies resulting in a between a value-creating deal.
Successful acquirors are rarely underperforming companies who make acquisitions in order to “turn their ship around”. Those underperforming companies will have difficulty attracting strong competitors to sell to them and, if they do, will have difficulty applying the seller’s know-how to their own operations. In the landscape industry, we are more likely to see strong performers who are looking to expand their know-how over a larger footprint.
Successful acquirors will usually have a goal for acquisitions. This may include:
- Add capabilities
- Expand geographically
- Buy growth
- Consolidate
- Increase scale
- Innovate
They usually have one or a few targeted geographical areas and a minimum revenue and net income size, among other factors.
In most cases, the successful acquiror will have determined first whether growth in this area is more likely to be successful or whether acquisition is possible and preferred. In our current market, many well-run landscaping companies are in the process of transitioning to new ownership either through internal transactions or sale to an acquiror. Often, organic growth is combined with growth through acquisitions. Organic growth may be attractive when the company is developing and rolling out a new concept, but it will tend to take longer and cost more. Growth by acquisition will allow for an immediate presence to capture market share and probably the opportunity to achieve cost synergies.
Successful acquirers will have documented procedures for originating deals, performing due diligence, executing the integration of the acquired company with the main or platform company and, most importantly, sophisticated communication strategies. Having a dedicated team focused on achieving these goals allows the business units to remain focused on their goals and to link in for critical times in the transaction. For example, if a business unit is going to be asked to sell new products into their existing customer base, they may involve members of the sales team from the unit as part of the due diligence team will help identify due diligence issues as well as begin the plan for integration itself.
Are you a potential buyer looking to add to your company’s growth? Are you a seller seeking to transition your business to a successful buyer? If you’d like to discuss your situation, selling or buying a business or preparing your business for sale, please let us know. In the meantime, if you have questions or comments, I can be reached anytime via email: [email protected] or phone at: 224-688-8838.
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