The rise of the Mini-Multinational

By James England, Investment Director

As international restrictions ease, many UK and European businesses are once again seeking to expand overseas - they are forming a new breed of ‘mini-multinational’ companies. Often providing world-class solutions to world-class clients, they’re looking to find ways to expand quickly into new markets to support their clients, to diversify risk and gain access to local talent pools. To achieve these aims, each business owner is faced with a choice – do I do it organically or via acquisition?

Very often the solution can be to acquire a business in a target geography. Although requiring more capital, compared to an organic strategy, acquisition can establish an immediate presence, bring local sector knowledge and intelligence into the firm, as well as clients and talented people. Done right, acquisitive expansion can be a surprisingly low risk, and substantially faster market-entry strategy, saving years of time and with a greater probability of success.

Analysing overseas markets, deciding priorities, sourcing and executing overseas acquisition opportunities requires time, focus and experience. At Sovereign, our in-house origination capability is highly valued by management teams. They benefit from our extensive network, our ability to quickly establish relationships with potential acquisitions, move conversations forward and identify where opportunities lie.

With two acquisitions since we backed the MBO of Aquitaine in late 2020, for example, the business is rapidly achieving its acquisition strategy of broadening its geographic reach. The acquisitions have helped triple the size of the business within nine months – something that would have been impossible organically. Everyone benefits from this – clients get broader and deeper service capabilities in more relevant countries, staff gain exciting career opportunities and the management teams achieve their ambitions more quickly.

For businesses considering the ‘mini-multinational’ route, a proven sector focused investor can really support the realisation of these ambitions. Collaboration is where the real magic happens, true partnerships are established and growth stories unfold. We really enjoy discussions around the ‘art of the possible’…