Which Firms Will Likely Be Popular M&A Targets?
Firms Which Are Strong Candidates for 'Bolt-On' Acquisitions Can:
Explain how their staff, technology and product set is organised to meet the needs of the highest-value activities for a specific client audience
Demonstrate how their IP and skillsets underpin profitable and differentiated products
Showcase an efficient operating model with multiple paths for growth
1. Are simple and targeted in what they do
2. Create Unique IP
- A piece of technology which is built in-house,
- A capability that sets the business apart from its competitors (e.g. a platform with a discretionary fund manager capability), and / or,
- Product / geographical expertise that is scarce in the market. Hot topics are Alternatives and ESG, plus continued consolidation in the wealth and platform spaces.
3. Ensure an efficient and scalable operating model is in place
On any deal, significant time is usually spent on determining the target’s scalability. While the target business will have proven itself at a certain size, it is often unclear whether its systems and processes are sufficiently robust to support growth of the business without requiring a significant investment in additional staff.
A buyer will look for an operating model with:
- Sensible use of outsourcing,
- Technology that is proven to scale, and
- A track record of growing without requiring many additional staff
Management will be able to talk to any historic operational issues and how they have been resolved, and show a change programme and IT roadmap that will enhance the business