Business owners on the hunt for acquisition opportunities: HLB Mann Judd Sydney

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Fifty per cent of business owners and managers will consider acquiring another business during 2015, with 14.7 per cent saying an acquisition is “likely”, according to a recent survey by HLB Mann Judd Sydney*.

However business confidence in increasing profitability in 2015 was mixed, with just over half of respondents saying they have “low confidence” of improved profitability during the year.  Of the remainder, 15.5 per cent are very confident, 17.9 per cent confident, and 15.6 per cent moderately confident.

The business confidence of those surveyed seems to reflect the challenges of the wider economic outlook, says Simon James, corporate advisory partner at HLB Mann Judd Sydney.

“In the current economic environment, businesses that are not confident of their ability to increase their profitability need to start focusing on improvements, in particular opportunities to improve internal systems and processes,” he says.

“They should put in place a detailed business plan and adopt a strategic view to drive business profitability.”

He said that an acquisition can be a successful strategy to increase the profitability of an existing business if executed effectively.

“While business owners shouldn’t pursue an acquisition just for the sake of growth, and must ensure it first meets their strategic objectives, it can be an efficient and effective way to expand.

“However the success of an acquisition is reliant on the strategic fit of the target company to the ongoing business strategy, the quality of the due diligence completed, and the post-acquisition integration plans.”

He says the first 100 days following acquisition are crucial to the integration of the acquired business into an existing business.

“The acquisition and integration can quickly become costly to both businesses if the right plans and management are not in place.

“Business needs to pay attention to the observations and insights gained through the due diligence process and appoint an integration manager to lead a successful integration.”

The quarterly survey also found that over 80 per cent of business owners were unlikely to exit their business in 2015, a finding which indicates a favourable environment for the 20 per cent of business owners who did want to exit their business, Mr James said.

“This presents an opportunity for other business owners to review their exit and succession planning strategies to meet the market demand for good quality business acquisitions.

“Those owners not considering a sale in 2015 should develop an exit strategy so that the business is “sale ready” to take advantage of any opportunistic sale opportunity,” Mr James says.

*The HLB Mann Judd Corporate Perspective is a quarterly survey of privately owned business clients. The latest survey took place during April 2015.

HLB Mann Judd is an Australasian association of independent accounting firms and business and financial advisers, with member firms in Australia and New Zealand. 

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For more information please contact:
Simon James
Phone: 02 9020 4212