Expert opinion

How to find the right business to buy

Myles Hamilton, Director and M&A specialist at Shaw & Co, explains the different channels you can use when trying to find a business to buy.

3 minutes
March 18, 2022
Words:
Myles Hamilton
Images:
Tim Gander Photography
PDF:
Report

It’s no secret but most acquisitions in the SME sector happen by accident. Well, not quite by accident, but by way of an opportunistic conversation or introduction that leads to an eventual deal. Little wonder, then, that a large number of these acquisitions end in failure; usually because no real effort was put into finding the right business to acquire in the first place!

If you are going to be successful in making an acquisition – and by successful we mean getting more money back than you paid or a favourable return on investment – a much more structured approach is required when identifying the right business to buy.

Myles Hamilton - M&A expert at Shaw & Co
Myles Hamilton - M&A expert at Shaw & Co

It’s a very large market out there and without a well-defined list of strategic criteria, you are going to get very lost very quickly. However, once your criteria have been considered and established, there are three key avenues for finding and analysing your acquisition targets:

Corporate Finance Houses and Brokers

Opportunities may come to you in the form of a direct approach from a corporate finance house or broker brandishing a sale mandate for a business that could be a perfect fit with yours. To improve the chances of receiving that call you need to be sharing your acquisition criteria with the advisors, but note that it will take a lot of calls to cover the entire advisor market.

Your Networks

It is always worth looking into your networks, supplier base, or thinking about competitors that you have recently come up against. It is likely that businesses within your sphere of influence could align with your criteria.

Other Networks

If you are serious about buying a business, you can explore other networks to widen the search. Approaching a corporate finance house to leverage their existing networks with business owners, investment houses and the funding community can expediate the search process.

The Internet

You should be able to build up a reasonably comprehensive picture of your acquisition targets with some desktop research. For example, any business worth acquiring is going to have a great website and probably a bustling social media presence. We are also very lucky that in the UK – thanks to disclosure requirements – resources such as Companies House are both freely available and a very useful source of information.

Any acquisition search is never really completed, businesses will move in and out of criteria over the months or years and a strong pipeline of opportunities will be required to make sure that you meet your M&A objectives. Lists will need to be built and maintained and continually updated, with the aim of the game being to build up an accurate map of the target market.

We work with UK SMEs and small-cap PLCs that have the ambition to grow their business by acquisition. We often act as an outsourced Corporate Development team helping clients meet their strategic goals through mergers and acquisitions. Our value lies in helping clients build rigour into the acquisition search and execution process. For a confidential, independent, no obligation discussion on how to buy a business, click the 'Let's chat' button.
Words:
Myles Hamilton
 - 
Director
Read 
Myles Hamilton
's bio

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