Yorkshire and North East Dealmakers Guide 2016 - 10

10 GROWING YOUR BUSINESS Swallow, or be swallowed Buying other businesses, or parts of them, is one of the ways companies can grow. And it's not just large companies eating up smaller ones. It is becoming much more common for acquisitions to be made by relatively small companies ACQUISITIONS ©shutterstock.com W hile large, publicly listed companies acquire businesses all the time, it's not something that a lot of small companies factor in to their growth strategy. However, a study by Avondale revealed that 11 per cent of companies with less than £1m turnover made an acquisition in 2015. On the face of it, that figure looks quite low but given the amount of companies that turn sub-£1m, this should be seen as significant. Many small business owners are realising an acquisition can be a faster and more sustainable way of growing. A business takeover by another in the same sector or close location will combine resources to reduce costs, eliminate duplicated facilities and increase revenue in the long term. A business can either grow through its organic sales and marketing strategy or by acquiring other businesses. With the more traditional route it can take quite a long time to achieve the growth required. Having a clear acquisition strategy can be a much quicker, and arguably less risky, route. The target will have an existing client base to tap into with contracts in place. It may also cover a wider area, which should mean the company has ready access to new and lucrative markets. It may well be cheaper too - the length of time it takes to grow organically will inevitably eat up management and workforce costs. WHAT TO FOCUS ON First, it is important to understand what an acquisition will bring to the business and how the best outcome can be achieved. This strategy must be carefully led and managed from the business owner or chief executive. Strong leadership, backed by an engaged management team, is crucial. Bringing on board relevant stakeholders and external advisers will also reap rewards. Many advisers will suggest the business should create an advisory board to build the strategy and to oversee the implementation. Employees are naturally cautious about change. They will need to be reassured about job safety or changes to working conditions. It's important to get buy-in from the whole workforce for the strategy to work, and early engagement and reassurances will benefit the business in the long run. The acquisition team must be clear about how the internal systems of the two organisations can be rationalised. This is usually a difficult, time-consuming process and the team should have a clear programme of integration mapped out in advance. Sector specialists should be brought in to advise wherever possible. Another consideration is how the cultures of the two businesses can be brought together. This should be easier when they operate in the same sector but a smooth merger can never be guaranteed and a lot of work during the planning stage needs to be done. A clear PR strategy should also be in place. It's important that good quality communication is produced, internally and externally. Messages should explain why the acquisition is taking place, what it means for the business and how it will be managed, in line with the overall strategy. http://www.shutterstock.com

Table of Contents for the Digital Edition of Yorkshire and North East Dealmakers Guide 2016