Wadds Inc. works with ambitious creative agencies and communications teams dedicated to achieving growth with social impact. Its focus is on helping management teams build a future proof, differentiated market position that exploits emerging opportunities, manages risk, embraces innovation and navigates economic volatility.
Here director Sarah Waddington CBE looks at key considerations for forward-thinking directors considering an expansion through acquisition.
M&A activity is at a high in the agency market. A challenging economy is prompting founders to evaluate their options.
Smaller agencies are seeking larger platforms. Larger agencies are looking for the opportunity to invest and develop in new markets.
We’ve never seen so much activity in this area in the three years Wadds Inc. has operated.
Asking the right questions at the outset can ensure that strategic decisions are evaluated properly and mitigate risk.
Decision-making and planning
If you’re a management team thinking about buying or if you’ve a business in your sights, always consider these things up front:
Does the acquisition fit with your strategic aims?
Why is the business being sold and what is its reputation like?
Is the acquisition a good cultural fit?
What’s the likely timeframe for the deal?
Is the valuation method one you’re happy with?
Is the appropriate finance available to acquire a reality and if not how will you fund it?
Will the company you are buying’s team and contracts remain in place post-acquisition?
What guarantees and clawbacks need to be in place?
Is the manpower available to drive through the acquisition?
What will the impact on your current business be?
Who will lead the process and the company afterwards?
Competitor activity and defending market share should always be part of the equation so also ask yourselves – if you don’t buy the business, who might?
Risk, reward, and red flags
According to the Institute of Directors, around 80% of acquisitions don’t meet their declared objectives.
Advisers are paid for managing and executing the transaction and not on its long-term success, so being clear on the rationale is crucial. Growth, additional capability, and strategic alignment are all excellent arguments for pursuing an opportunity.
Agreeing on boundaries and no compromise areas helps to ensure clarity for all involved and avoid missteps.
Realising the benefits
Integrating a new business brings challenges, but strong communication and conflict resolution can reduce friction and increase acceptance and engagement.
Ensuring everyone understands the vision, mission and values and the reasons for the acquisition can reduce workforce stress while the alignment process takes place, while clearly defined responsibilities, strategic goals and KPIs will ensure the greatest chance of success.
If you’d like help with preparing for a sale or acquisition, or are looking for a non-executive director to bring diverse thinking to your Board, contact Sarah Waddington via 07702 162 704 or sarah.waddington@wadds.co.uk.
