18-22-cover 2 22/4/09 16:24 Page 22
COVER STORY
Be choosy about the right business
KEN LINDSAY – DIRECTOR, ECI PARTNERS
✯
In the last three months, we have completed carefully and wisely.
three bolt-on acquisitions for investee Secondly, bolt-on acquisitions can
companies, and are actively pursuing several definitely still be completed, but expect it to
others in the UK and around the world. be challenging. Debt is available for the right
Two lessons stand out from our recent deals, but the banks will insist on more equity
experience. Firstly, it’s even more vital in than was the case even 12 months ago (and
the current climate to pursue only the best you will find yourself agreeing to more
“Acquisitions are risky at the best of times, but get one
wrong in a recession and you may not get a second chance”
acquisition targets for your business. Be onerous covenants and pricing on existing
extremely selective – there must be a debt into the bargain).
strong commercial logic for the deal and Due diligence on any target businesses in
the combined business has to deliver synergy this economic climate is certain to throw up
benefits in reality, not just on a spreadsheet. some unpleasant surprises. But don’t be put
Don’t be tempted to buy a business off. Despite these challenges, there are some
just because it appears cheap – acquisitions great opportunities for bolt-on acquisitions
are risky at the best of times, but get one being thrown up by the global economic
wrong in a recession and you may not climate. Be very careful, be very certain,
get a second chance. Choose your targets and you can be bold.
Deliver long-term value
ALASTAIR SMITH – CEO, AVACTA GROUP
✯
Generating significant value from The model we are using to boost the
acquisitions in the downturn is less sales revenues and margins of a recently
about fixed and operating cost synergies acquired veterinary diagnostic services
or economies of scale and more about business is a good example. This involves
how the skills, expertise and intellectual harnessing the capabilities of our
property of the two companies can be biopharmaceutical operation to streamline
leveraged to improve processes or the delivery of the existing tests and
competitiveness of each other’s business. provide new diagnostic services, while
“Some value can always be created relatively quickly through
cost savings identified by the financial functions, but real value
that grows over time and feeds itself is more difficult to find”
Some value can always be created also developing disposable point-of-care
relatively quickly through cost savings screening tests that will drive upselling
identified by the financial functions, but real of comprehensive diagnostic services.
value that grows over time and feeds itself is Seeking this sort of long-term value
more difficult to find and requires some should drive acquisition strategy in the
innovative thinking and a detailed downturn and, if it does, then the
understanding of both businesses. benefits are bound to follow. ■
22 Mergers & Acquisitions
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60