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12.05.22

Successfully integrating international acquisitions – Sovereign’s three key learning points

James Dargan & Alex Hay

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Given Sovereign’s heritage in Buy & Build, (growing businesses through acquisition and/or organic growth), we like to challenge ourselves and our portfolio management teams on the best way to grow a business. The key driver of a successful Buy & Build is developing further services and capabilities that existing customers would like to buy - revenue synergies are what excite us as an investor. So the question is invariably: “Would it be better to acquire this service or capability, or to developit organically?”

If the answer is by acquisition, we focus on providing our management teams with as many high-quality potential options as possible, so the best choice can be made. We always rely on their entrepreneurial; instinct to assess the operations of these businesses.

A company’s customers often want to purchase its services in new countries. Acquisitions are therefore a logical route to provide this geographic extension to customers, as well as a great way to rapidly scale and consolidate market share. After 20 years of acquiring and integrating businesses internationally, below are three key lessons learned:

  1. Culture: Every country and every business will have a unique culture, but for an acquisition to be successful there has to be a common alignment on strategy and style. There can be no replacement for management teams spending time together to understand each other and their respective businesses, in order to assess whether a combination will be successful;
  2. Breadth of integration: Whilst centralising core back-office functions such as finance and compliance can often be key for a successful integration, there can be differences in operations between businesses to reflect their unique selling points to customers – don’t lose this; and
  3. Diversity of perspectives: Diversity breeds ingenuity, so providing forums for all staff grades and geographies to input into the Group strategy is key to generating and selecting the best ideas for growth.

These are the foundations for a successful international acquisition and we’re sure you can add to this from your experiences in your business. To discuss international growth strategies and find out more about how we work at Sovereign to support strategic growth across geographies, please contact James Dargan and Alex Hay.

FURTHER INFORMATION

 

Julie Sieger, +44 (0)20 7340 8800 or email: juliesieger@sovereigncapital.co.uk