Value Enhancing Acquisitions
To complement our organic growth strategy, we make selective acquisitions to accelerate growth and take us into new but related markets. Prospective acquisitions should be sales and marketing led with strong customer relationships and a secure supply of quality, differentiated products. They should have capable management, and the potential for profitable growth and cash generation.
A competitive advantage we have in making acquisitions is our flexibility in structuring transactions. In many of our medium sized acquisitions, where we are extending into new markets or geographies, we have acquired less than 100% of the business. In these cases, we have left owner managers with a minority stake in the business (up to 25%), with put and call options exercisable over 3-5 year periods. This allows vendors to remain in the businesses with a large part of the value crystallised, but still with the potential for future gain. For us, this reduces risk and gives us additional confidence in the quality of the acquisition.
The Group's robust balance sheet, supported by strong and consistent operating cash flow, give us the resources to support an active acquisition strategy.
