Shropshire businesses who are keen to expand should consider a ‘buy and build’ strategy to deliver rapid results.
That’s the advice from DY’s Cian Iddison, who says strategic acquisitions could be an excellent way of growing a business.
“Many businesses looking to expand may have thought about buying up other businesses, but felt too nervous about the risk or the process.
“But at DY, we are members of The Corporate Finance Network, which means we can support clients through the process with a streamlined approach and the very latest business intelligence.”
Cian said acquisitions could also be an excellent way to address and mitigate existing challenges, weaknesses, or threats in a business owner’s own company.
“Purchasers typically use a multiple calculation of earnings before interest, taxes, depreciation and amortization (gradually writing off the initial cost of assets), or a multiple of revenue to assess the value of a company.
“The multiple varies depending on several factors such as the sector, growth prospects, market conditions and the potential purchaser’s assessment of the risk.
“And if a business owner is looking to plan their exit from the business, they will want to maximise the valuation.”
Cian said a significant factor that can influence the valuation of a business was its size – larger businesses often command higher multiples in their valuations.
“This is because they can achieve economies of scale, they have a more substantial market presence and brand recognition, and they will have a larger team to ensure duties can be delegated so they’re not relying on just one person.
“They also usually have diverse revenue streams which reduces their dependency on a single product or market, and they often have better access to more finance options.”
Cian said acquiring another business could be a powerful strategy to increase the size of your business, and in turn, its valuation multiple.
“But not all acquisitions are created equal – the key is to identify and pursue acquisitions that fit your growth objectives and address existing challenges, weaknesses or threats.
“Organic growth is difficult and takes a long time, so growing through strategic acquisitions is much faster and impactful, and the right acquisition can transform your business and unlock new opportunities.
“Any business looking to find out more about buying businesses, financing the deal and how to measure and mitigate potential risks during the process should seek professional advice before making any long-term decisions.”
Cian Iddison, Business Advisory Senior
