What is Smith and Williamson Corporate Finance?

Brian Livingston, Director, Corporate Finance, Smith and Williamson:

Smith and Williamson Corporate Finance provides advice to entrepreneurs and owner-managed businesses on buying a business, selling a business and raising finance for a business. For many entrepreneurs these transactions will be one of the most important things they ever do and one of the most stressful things they ever do. Our role is to simply assist that entrepreneur in making the process as painless as possible.

How do you avoid making an acquisition?

Acquisitions are one of the major destroyers of value in any business. So many people buy first or buy in haste then regret later. Indeed, when you look at academic research on the subject about 85% of acquisitions are either bad or very bad. On the one hand they can turbo-charge your business, on the other hand they can destroy your business.

What are the most common misunderstandings in making acquisitions?

One of the most common misunderstandings in making an acquisition is that a good acquisition is a cheap acquisition. A good acquisition is an acquisition that becomes a cheap acquisition. A good acquisition is not simply because you can buy it cheaply. The good acquisition isn't generally about pricing, it's about making the right acquisition. What is the right acquisition? The right acquisition is a business that fits what you want it to do, it adds something to your business, the people add something to your business, it's something you understand, it gives you more than what you've got already. If it can add new customers, new supply chain, increase your factory space then there's something real. But if you're simply making the acquisition because it's cheap or because it adds revenue then that generally is a recipe for disaster.

How do I make a successful acquisition?

Decide what the strategic value is first and pricing follows. Don't decide upon the price then let the strategic value follow. A further key element of making an acquisition for me is to know the target very well. Quite often the first time people really look at an acquisition in detail is when it is presented to them as part of a process or something like that. The best acquisitions are people that you've got to know very well and you understand each other so that when you're ready to do a deal, it's less about the price because you've already agreed a meeting of minds and it's more about the synergies, the values that you hold together and you becoming what you perceive to be a good home for the new business. The final point is, that too many people who make acquisitions think that the work stops the day they've bought it. The work starts! It's about whether you can make this organisation as part of your company, as part of your culture so that at the end of the day in three, four or five years time people understand that there's one business and in that way you will have a successful acquisition.

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