Thoughtful acquisitions can expand geographic and product reach. The current backdrop has revealed fresh opportunities which may be more attainable now – but the right mix of funding and transaction experience are crucial to ensuring success.
Growing a business is hard work. A lot of graft, a little luck, and tremendous perseverance is needed to turn an idea into a successful enterprise. Adding a pandemic into the mix caused most if not all businesses to pause and then adapt.
“Adapting has helped many companies to survive, and we’ve seen quite a number going on to thrive,” says Mark Williams, Partner at Inflexion Private Equity. He can talk to the experience of a 50-strong portfolio, which range in size, sector and geographic reach. “Initially we saw an acute focus on retaining existing revenues across most of our portfolio. Goals became shorter term and KPIs were reviewed very regularly in the spring. This shift saw a renewed focus on the human side of things, with Inflexion harnessing the collective wisdom of its sizeable portfolio to share best practice for looking after the wellbeing of staff."
As management teams got as close to ‘business as usual’ as possible, we cast our energy beyond the day-to-day operations and considered strategic planning as well, as we knew it was important to maintain the muscle of a business to prepare for the eventual upturn.
Spring into action
A key growth lever for Inflexion’s portfolio is M&A, owing to the transformational impact it can have on a business. “Spring 2020 saw some of the portfolio pause but not stop with these plans: we already had a number of discussions underway with management teams, and 18 have signed this year,” recalls Mark. Bollington Wilson, one of the UK’s leading independent insurance brokers created by an Inflexion-backed merger in 2017, was among the acquirers, and by August announced Watson Laurie as its fourth acquisition of the year to expand its regional presence in the North West of England.
Two of the Q2 acquisitions were led by Alcumus, a provider of risk management solutions which had two earlier acquisitions and over four years of Inflexion support under its belt prior to the pandemic. “There is a strong level of mutual trust between us and Inflexion. Just nine weeks after we first partnered, they supported our purchase of Santia, a transformational transaction for us. That experience showed us how valuable having a financial backer with experience in this delicate matter can be,” says Tim Jackson, CFO of Alcumus.
Trust and experience are always important, but never more so than now when it comes to getting deals across the line remotely. Last year Alcumus expanded into North America with the acquisition of eCompliance, and set its sights on ContractorCheck in Canada shortly thereafter. Discussions with management commenced in December 2019, with open and honest conversations building a relationship based on trust – which would become crucially important when coronavirus catalysed remote working just a few months later. Alcumus also approached UK-based Banyard Solutions in February, by which point coronavirus was already in Europe, and so those negotiations were conducted almost entirely remotely. With the learnings of two prior acquisitions to draw on as well as the ongoing support of Inflexion, terms were signed in March and both deals closed in June.