M & A Rainmaker

Sunday Times Tech Track 100 company 365 iT is set to further accelerate its growth with a new office in the City of London .

February 2011

365 iT was recently ranked 15th out of the fastest growing technology companies in the UK according to the prestigious TechTrack league table.

It now starts 2011 with further ambitious expansion plans by opening a new London office to meet the accelerating growth opportunities in the financial, legal and property services sectors.

With a growing portfolio of managed service offerings, backed by best-in-class vendor partnerships which include Cisco, Microsoft, Citrix,

Verint, Zeacom, IBM and VMware, 365 iT is excellently positioned to deliver IT solutions that are relevant to the needs of both existing and

new clients in key market sectors.

Commenting on the new offices Peter MacLean, 365 iT plc’s chairman and chief executive, said: “Based on our success with London clients

last year it has become evident that many companies are increasingly looking for a technology services partner that can meet all of their requirements whether it is a new communications system or a virtualization solution. Furthermore local service and support is key to these businesses hence the new offices.”

In addition to providing a base for a new sales and support team the new office in the heart of the City at Old Broad Street will offer clients an excellent venue for technology briefings, business seminars and demonstrations.

The key focus of the new team will be to work with clients to help them understand and justify how technology investments can significantly support business initiatives such as security and compliance, client service, real-time collaboration and business continuity.

MacLean adds: “An experienced team has already been recruited and  the office is open for business. The next stage is to work with our supplier partners to deliver a series of seminars and workshops at the offices which demonstrate the  true business benefits of the technologies and services we are proposing. The first seminar: Collaborative communications that meets FSA compliance is scheduled for March. Others scheduled for later in the year which will focus on critical issues in the legal and property services sectors.”

Some time ago ( after I built this blog ) I came across a company called BCMS who had had a lot of experience in selling companies. I read the information on their website, downloaded various other information and ordered a copy of their excellent book  ” A refreshingly different approach to selling your business for maximum value “.

Later on I attended one of their excellent seminars. ( Very refreshing for Business Owners but a bit damning of normal accountants and lawyers !! )

In this presentation they highlighted the Top 10 reasons/motivations for company purchase ( in order of importance )

After I wrote the main ” Selling a Business ” section of the M&A Rainmaker blog I came across the BCMS Corporate website here

http://www.bcmscorporate.com/

BCMS Corporate are a fabulous, family owned professional services  business focussed on the SMB sector and helping them acquire and dispose of businesses. They have a great downloadable book on thier website which I highly recommend.

They have considerable experience in the sector and I found that thier approach and sales process had many similarities with the one that I used and have advocated here.

There is no doubt that maximising the value of a business requires that you approach large numbers of companies, globally, many of whom would not have been in acquisition mode. If the potential acquirer( through skillful analysis and salesmanship ) is then convinced of the synergy and accretive nature of the acquisition they will be inclined to pay more than simple financial valuations indicate.

If, in addition, emotive considerations come into play, such as ” There will only be one chance to buy this company ” or ” I have to buy this company before my competitors do ” the the valuations will climb further.

So, I am entirely supportive of the BCMS Corporate approach ( and I might not have outlined all thier special processes here ) and the fact that it helps to maximise valuations.

What I try to get over to companies is the fact that you have to be thinking about maximising valuations well before you decide to sell. BCMS Corporate ( or any other M&A or Corporate Finance house ) basically do thier very best with the hand that they are dealt. They probably have about 6-9 months to ” clean-up ” the company.

This is not enough for real value creation and for addressing all the factors that can inhibit the value of your company such as lack of succession planning.

The conundrum is how to begin addressing these issues at least 3 years BEFORE you decide to exit. It is likely that if the business is an ” exit route business ” value creation ( and all that goes with it ) will be built into the strategic plan. Lifestyle businesses that decide to exit some time into thier business life are a different matter.

One of the reasons for creating this blog was to make business owners aware IN ADVANCE of the need to prepare a business for exit years before the event. Clearly this is a bit of a challenge because if you are not thinking of an exit you are not likely to be spending any time or money planning for it !!

Actually this is happening ! My colleagues and I are working with some businesses who are planning for an exit some years away. They have said to us ” What do we need to do to maximise the value of our company if we sell in about 3-5 years ” ??? Clever people eh ??

I am not going to describe all the things that can be done if you have that much notice but let us mention a few:

– One big one involves crystal ball gazing !!! There is general agreement that you want to sell before your business reaches the peak of it’s lifecycle so that there is life and growth in the business for your acquirer. To do this you need to understand your market and your business cycle.

– More crystal ball gazing is involved in attempting to predict what acquirers will be looking for 3-5 years hence and who those acquirers might be. This is just hard – it is not necessarily impossible !!

– You should try to be providing what the industry regards as ” sexy ” or ” fashionable ” products and services ( I keep my eye on Gartners predictions for the High Tech market )

– Ideally you need to show scalability and replicatability in your products and services

– Ideally you should have global possibilities for the sale of your products and services

– You should have clearly defined processes within your business eg dealing with support issues, forecasting sales

– You should ideally have Intellectual Property ( I.P. ) , something unique that you have invented

– You should have recurring business ( eg maintenance and support contracts )

– You should have a succession plan for all the main management ( I call this the ” If we all go down in a plane test ” )

There are many others but hopefully this gives a sample.

My colleagues and I spend our time helping companies with these and other ” business valuation drivers “.

When you combine these with the correct disposal approach you will almost certainly have a great result.