Many business owners come to mergers and acquisitions at a point in their business lifecycle when they’re at the end of the journey – retirement, a sale or an exit event – but business owners are increasingly looking to M&A as a tool for growth.
For ambitious businesses, M&A is becoming a practical way to scale, de-risk and accelerate growth, without relinquishing control or stepping away from the business. Used well, M&A isn’t an alternative to growth, it’s a means to achieving scale faster, and more sustainably.
How M&A supports growth
M&A has typically been inaccessible for SME business owners, but wrappers and groups of businesses in similar markets can create a scale that improves EBITDA and therefore valuations. Rothbridge Investments specialises in enabling SMEs to access the M&A opportunity, through exactly this mechanism.
But rather than selling and getting out, many owners also use the process to move forward, and be part of a larger business. In effect, business owners are exchanging full ownership of a smaller business to take a meaningful stake in a larger one. With some owners using the merger as an exit event, others that have the desire to continue can take leadership roles across a wider business, and collaborate across the wrapper to access larger opportunities.
Acquiring other businesses to accelerate momentum
Another route to growth is to be the acquirer. Acquisitions can be used to shortcut growth, with quality moves removing the constraints and allowing business owners to buy what could take them years to build. Some acquisitions are about market share, others are about data, technology or systems, and others are a route to diversification.
Rothbridge Investments facilitated a double acquisition for IT business, Infinitech which enabled the business to provide an all-in-one solution to businesses, supplying hardware, managed services, web support and consultancy, such as audits and systems advice. Founder Scott Paterson wanted to accelerate his business growth, with a longer term eye on the potential for an M&A exit.
The next phase of your business
A useful question for business owners to ponder: could your business be part of something bigger?
M&A doesn’t have to mean a sale and an exit, it can be used to propel your business into the next phase of growth.
Prepared businesses are going to get the most out of M&A, and that’s why we often work with clients for up to two years in advance of an exit or event. Businesses need to be ready to go through the process, and as a business owner you need clarity on your vision, and where you want to take your business.
If you think you could build something bigger, give us a call.