Ambitious companies are increasingly looking to grow through acquisition – but it’s far from a straightforward process.
One man who knows better than most about the pros and cons of M&A is Rob Sims, CEO of Chorley-based telecoms and IT specialist Elite Group.
In 2017 his Leeds-based business Nexus Telecommunications became one of Elite’s 17 acquisitions and as CEO of the company that bought him, he’s now tasked with overseeing their buying strategy.
In 2018 Elite’s founder Matt Newing secured a £30m refinancing deal with Lloyds Bank to fund future acquisitions – but how do you pick the winners from the losers?
According to Sims, growing through M&A is a trial-and-error process.
“We have an acquisition strategy and you learn from your mistakes,” he admits to TechBlast. “We were a bit of a Martini company at first – we’d buy anything from anyone.
“We’d do a deal and sometimes it worked, sometimes it didn’t.
“Sometimes we bought a company out of administration and the lesson we learned was that, in the main, companies are in administration for a reason. They’ve not normally been run very well and that makes it very painful.”
Sims urges any company wanting to grow through M&A to come up with a clear plan first.
“Having an acquisition strategy is really important,” he says. “You have to understand where you are as a business now in terms of strengths and weaknesses and where you want to go.
“We have historically bought businesses that look very similar to ourselves where we effectively did the synergy play.
“Now we are actually acquiring businesses for the skillset and capability and not so much product because I think we’ve got that more or less nailed.”
Elite Group now has a turnover of nearly £50m and a workforce of 200+. Sims believes acquisition for recruitment is now a key motivation.
“We can recruit and train for certain positions but there’s a lot of competition out there and we’ve found it’s easier to acquire businesses and bring the skillset in,” he says.
“That does bring other challenges, with the main one being amalgamating the different cultures.”