As business owners, we know that organic growth is hard.
So if you are thinking of ways to grow your business, M&A is one possible solution.
It can get you market share faster, but it has to be done correctly and you have to plan for it.
And that means making sure that not just the acquisition, but the integration is done right and that you need to understand your rationale ahead of time. And of course, you need to have the correct financial backing.
Today’s market is seller-light, so it is also important to remain cognizant of your buyer brand because once you go and engage with sellers, that are serious sellers, then you need to show that you’re authentic and that you can deliver the deal.
But before you reach that stage, you of course have to identify that right company as a potential acquisition.
Olga Blasco has this advice for companies who have never bought before and are considering buying.
“Look at the value-drivers and at what would fit into your strategy,” she says. “Think about what kind of clients you want, and what kind of clients you wish you had the expertise for or the geography.”
“Maybe acquiring in a particular market can get you there. Or maybe there is a piece of technology that would really help you propel growth. If you buy a company that has it, or if you buy a company that essentially develops technology, that can help you get there.”
Olga also emphasises the importance of securing the right financial backing for any deal.
“You need good financial backing not only to be able to complete the acquisition, but also because acquisitions take time to fulfil their return,” Olga says.
“So you need a plan that shows if we spend this kind of money and we acquire this kind of company, we’ll get the return in this timing.
“And in the meantime, while we have completed this acquisition, we need to demonstrate that we can also grow organically.”
According to Olga, there are a number of key ingredients that make a company particularly attractive to potential buyers.
“The right ingredients tend to be a company that is clearly doing well in a niche and has potential, that has a good reputation and a good brand that can help attract new clients,” Olga says.
“Maybe they have presence in markets that are hot at the moment and that are coveted, and they have people who can talk to clients in the client’s language.
“Or maybe they are tech-enabled through their technology or the way that they use technology is kind of clever and smart, and it’s propelling their delivery, and it’s basically enhancing their reputation.
“So I think that companies that tick all these boxes, they tend to be highly desirable.”
If you want to know more about this area, visit Lion People Global’s website where you can watch back our M&A Talks series of videos and fill out a questionnaire that entitles you to one hour’s free consultation on getting a LSP or language tech business ready for sale.