For the SME, the opportunity to grow their business through acquisition gives them an excellent edge when it comes to differentiating themselves from the rest of their competition.
Many SME’s grow organically, and those who recognize that by looking at acquiring either a competitor or another business in their field, gives them the chance to actually grow more rapidly. There are huge amounts of advantages.
For example, if you’d buy one of your competitors, you have the opportunity of creating synergies between both businesses. You can buy more cheaply, you get the benefit of actually getting their staff to counteract with your staff, creating competitive forces within your senior management. This also means that you can get a stronger market presence, and in many cases, it puts your competition on the back foot.
What we have found is that when companies buy another company, the messages goes around their marketplace very quickly. This sends out a positive signal that they’re well-funded, they’re successful, and they’re actually on the front foot.
It also helps them to gain market share, which enables them to change their pricing. And sometimes they can get better pricing for the same amount of product than they were doing previously.
Finally, all of our customers think about their succession, how they’re going to exit their business. And in many cases, if their business is too small or the management team is too weak, they’re not large enough to attract a large purchaser and they don’t have the infrastructure to construct a management buyout.
So we find that acquiring other businesses, which gives them more scale, makes them more attractive to a predator, but also builds a stronger management team, gives them the opportunity to look at different succession options, and retire successfully.
So in some cases we say you’re better to acquire to retire.