Business acquisition - meeting your match

2nd of December 2016
Business acquisition - meeting your match

James Metzger of Metzger Business Search (MBS) shares insights on the value of taking
the time and investing in the research to find the right company to acquire when expanding your business.

A company may have different reasons for considering an acquisition.  Whatever the reasons are, fundamentally, the process should involve certain elements for a greater chance of a successful match. A bit like a marriage, there’s a desire to be together, a courtship, getting the family’s blessing, making sure the couple’s finances can support them and then, sealing the deal.

It’s alright to change the rules when it comes to facilitating the dialogue between the buyer and seller. It just means going that extra mile to achieve the right fit between two organisations.
The first step is having a complete understanding of the buyer’s needs. Acquisitions are usually led by a focus on the seller, however, there is merit in putting just as much focus on the buyer.

Without a thorough knowledge of the buyer’s commercial objectives and capabilities, an acquisition can turn out to be a disappointing white elephant. For example, it is just as important to establish that the buyer has adequate financial resources to complete the acquisition, as much as establishing that the seller wants to part with their business.

In many cases, Metzger Business Search will know the seller just as well as we know the buyer. There’s no doubt that the long cultivated business relationships help to smooth the process, from either side. However, when the contract is signed, our primary client is always the buyer, our first focus, and the only entity who pays for our services.

From the outset, an advisor needs to have a clear vision of what kind of target company will dovetail into the buyer’s company culture and business aspirations. There may be several reasons for wanting to acquire and expand one’s organisation. It may be geographical: seeking to create a brand presence in a certain region is easier to achieve if you acquire an established package of local expertise, reputation, skill set and workforce.

Another driver is the desire to diversify into other sectors. This offers clients a wider range of options and the ambition to create the ‘one-stop-shop’ model is not unusual. It encourages a consistency of service and strengthens relationships with the client across different areas of service delivery. It also helps to encourage repeat business – as the professional relationship thrives, so does the trust, and the client will generally come back for more of the same.

An acquisition negotiated by my company, MBS, came to a successful conclusion recently - Exclusive Services Group wanted to extend its services portfolio in specific market sectors and acquired Brayborne Group. MBS has enjoyed a long professional relationship with Exclusive Services Group.

However, we focussed our energies in establishing exactly what they needed to achieve in this instance, so we could find the right company that would help them attain their goal. We never take the buyer’s position for granted, no matter how long the professional relationship is between us.

Making business personal

Being personal about business may sound counter intuitive however, when facilitating an acquisition, it has its advantages. By cutting through the usual barriers of anonymity, applying patience and the personal touch, it’s possible to utilise a more effective advisory model that garners good results for clients.

The first step is to reach and speak to the relevant decision makers in the target companies to progress negotiations effectively. This may entail approaching companies that are not openly for sale. There’s no reason not to start the dialogue and make the suggestion of considering a sale. My feeling is, if you don’t ask, you don’t get and therefore, I have nothing to lose by making the first approach.

This is where you can create an opportunity, as long as you know how to reach the right people. Don’t rely on the traditional method of mass emailing lists of potential companies for sale. Once you have determined which company you want to approach on the buyer’s behalf, engage on a more personal level, by telephone. Having the right message at this point is also key – delivered with sufficient confidence and empathy to encourage engagement and consideration of the offer.

As long as you are able to communicate clearly what the buyer’s interest is and that the transaction can be sufficiently financed, the likelihood of further discourse is strong.

When our client Exclusive Services Group sought to expand its operations, the ideal target company for acquisition was Brayborne Group. Brayborne’s portfolio, size, services and client base were a perfect business match. However Brayborne was not for sale. This is where patience and the personal touch comes into play. MBS reached out to Brayborne and opened the channels for communication, making an offer, broaching the suggestion that joining forces with Exclusive Services Group would be mutually beneficial.

In spite of this slightly riskier and lengthier approach, the success rate with this method has proven high for us.  You’re less likely to disappoint your clients because such attention to detail is expended to ensure the deal closes out favourably. There is also strong potential to increase the track record of return business using this method, because clients never forget good service, good understanding and a good deal.

One of our clients, Regent Samsic who was looking to better position itself in the London market, recently acquired JPC - the second acquisition facilitated by us. MBS was asked to carry out the follow-on assignment with Regent Samsic because it trusted our methods and transparent approach to ensure that we would find the right match for it. It wouldn’t simply be presented with a list of un-researched, unsuitable companies with whom to develop a new professional relationship.

There is also value in understanding the decision-making processes that the seller needs to go through when making the decision to sell their company. It is never an easy decision to make, no matter how tempting the offer from a buyer. As any business owner will know, an entity that you have fought to grow, through lean and good times, becomes more than an asset; it’s almost part of the family. Deciding to part with a company, or even being persuaded to sell is a test of resolve and becomes a very personal decision.

Perfect fit

When one of our German clients sought to expand in the UK market, it approached us to find a UK based company for it to buy. We in turn contacted the ceo of Wyclean Group, which had been approached many times by other companies offering to buy the business, but on those occasions he wasn’t prepared to sell. When MBS approached Wyclean’s ceo on behalf of the buyer he entertained the idea because he felt the match was a perfect fit, he trusted our research and due diligence and the timing was right.

While MBS and Wyclean enjoyed a good, long-standing professional relationship, we were very aware that Wyclean’s ceo wanted to part with his company on certain terms. His primary condition was that the buyer would respect the existing Wyclean team and maintain the integrity of the business that he had built over 30 years. Because the client wanted another established UK business in place to enter the market, this fulfilled the Wyclean ceo’s parting vision for the survival of his company, after he had sold it.

It’s often the case the case with sellers, that they want assurance that whichever entity acquires their company, it safeguards the staff and respects the company culture in the future.

Research is everything

I can’t stress enough how important good data is. Rather than estimate the value of the target company and supply it on a generic list of anonymous contenders, it is vital that you reinforce your choices with thorough research.

Learn everything about the target acquisition from its inception to its shareholders. As company profiles are prone to change frequently, their structure and culture change along with it.

Businesses are always evolving and researching their performance is a significant driver of a successful outcome. Thoroughly research their financials - are they in debt, are they cash rich, is the company growing, how sustainable are their profit margins, what are the directors taking in remuneration and dividends?

When focussing on the buyer, first we must establish what they have in mind.  By all means get the client’s opinion about what they envisage for their expansion. Are they looking for a particular size of company? Furthermore, is their financial capability up to the task? Financial considerations need to be weighed up against certain options.

For example, will an acquisition garner a higher return than investing the money in expanding their existing company model? In which case, an acquisition might be a wild goose chase because the potential for growth is right under their nose. All it takes is a good plan and careful expenditure of resources.

Over time, we have learned what key information to research for maximum benefit to our clients. For example, have you considered the shareholders in the seller’s company? We’ve found that
family run businesses that incorporate the next family generation into their shareholdings are less likely to sell. They’ve forged this business for the long haul and want to pass the company down through the generations.

Other areas to explore include the interests of the target company’s stakeholders. Will an acquisition be well received by them? Will the vendors want to continue the relationship if an acquisition is on the table?

The same applies to the existing management team – are they on board with the acquisition proposal and prepared to work together with the buyer’s company?  A management culture clash would be obstructive and could cause a failure of the whole deal.

By utilising research properly, an advisor can potentially offer a holistic service from proposal of acquisition to the seller’s exit strategy.


By not following the traditional models of targeting companies, Metzger Business Search has developed a successful and more personal method of acquisition search that is built on cultivating strong relationships with potential targets.  By combining intuitiveness, solid research and really understanding both parties’ aspirations, an acquisition can become a seamless undertaking. In the end you want to create a strong business pairing that resembles more of a merger of two successful companies than simply a soul-less addition to one’s assets.


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