Acquiring for growth: How to find the perfect bolt-on

Acquisition growth can provide a company with potential to expand significantly in a short space of time. It gives the opportunity for businesses to fill a portfolio gap, or the opportunity to boost their competitive advantage by purchasing synergy businesses. This can also enable a business to grow overnight and provide scope to enter new markets and target new customer segments.

But how do you find the perfect bolt-on business? There are several factors to consider when acquiring a new business.

Plan your reasons for growth

Like everything, having a plan is important, especially when you’re looking to acquire a new business. Not having a plan could lead you into purchasing a business which is not suitable for your company. For example, if you’re looking to expand your business on a national scale, looking for a business close to your current location would not be suitable. Therefore, looking for businesses in a separate region would be ideal, as it suits your plans to grow geographically.

A new business model

A business may offer a new type of service, such as accountancy, insurance or a separate professional division. If you’re considering a new business model as part of your growth structure, the easiest way to develop and test it out is to acquire a well-established business that successfully operates the model. The main reason for this is to avoid possible missteps from inexperience.

You might target a company that’s in a strong position to achieve your vision through acquisition, which will save a significant amount of time rather than implementing the business model to your current operations. Furthermore, your business could have the facilities and funding to develop the model even further, providing a strong platform for expansion and generating larger profit figures.

What can the business bring to you

If your company revenue comes from a single market, you may want to branch out into other sectors to create greater security. You could do this organically, but a faster way is to acquire businesses that are already thriving in other markets. A perfect bolt-on business is one where they can bring something new to the table and provides another reliable income stream. An example of this is a business which has a diverse and well-established client base and service offering, and one which is not dependent on one client. Buying a business with low reliability on a single client’s income provides a secure stream of income year-on-year, and one which adds value and opportunity to grow your company.

Identifying the strengths of the company

When you’re looking at bolt-on opportunities to grow your company, it is imperative that you look at the strengths of the business. Highlighting the key strengths of a company, such as a well organised management structure or an excellent reputation, enables you to figure out how they would improve your company, and what areas could bring in higher sales figures to your operations. In turn, it also highlights what areas need attention to maximise the growth potential of bolt the acquisition company and your overall model.

Your business can make a difference

A business with low profits, or one which is making a loss, doesn’t mean that it’s a ‘bad business.’ In certain scenarios, it could be a perfect bolt-on opportunity. A business could have all the right elements to thrive, but they don’t have the capacity to fulfil their potential, or the right plan in place, which could be a factor as to why it’s not performing well. If your business can provide the required resources and the right plan to unlock the company’s potential, the sales margins will quickly change to high levels of profit and the business will become an excellent acquisition.

If you want to seek expert advice on acquisition opportunities to grow your business, contact our industry-leading team on 01772 775 775. We are available to discuss your plan and to help you find our perfect bolt-on acquisition.