How significant a role is M&A playing in the world of IoT?
As with any expanding industry where prospects for growth are significant, M&A is playing a key role in assisting business owners to help secure investment in their company, or even acquire other businesses, thereby capitalising on these opportunities faster. Technology is propelling many industries forward with IoT now underpinning many critical services. Critical service industries, including Fire & Security, demonstrate an attractive business model of reliable monthly and annual subscription revenue through maintenance and monitoring contracts. They guarantee recurring revenues and reliability of income which is a major attraction for investors. A buoyant M&A market does result in more investment activity as investors can see a path to be able to exit their investments.
What would your advice be to business owners who are looking to sell to, or merge with, another company?
M&A offers a great opportunity to realise the value of your life’s work. Business owners need to have a succession or exit plan as they look towards retirement or to be able to explore other interests. M&A ensures that your business is passed on to the right new owners. In most cases this involves a period of transition, with the previous owner staying on for 1-2 years, typically in a non-executive capacity, to facilitate a smooth handover to the buyer. This ensures continuity for customers, staff and owners alike.
Building value in the business ahead of any deal is vital. Driving growth and profitability margins that show an upward trajectory will always appeal to potential acquirers. Investing in better technology leading to lower maintenance costs and longevity of the systems, will help make your business more attractive and valuable. Even better is adding new, recurring revenue streams and diversifying your customer base. You can also future proof your business by investing in long-term solutions which all leads to the exit value going up!
Why do businesses look to M&A to assist growth?
Organic growth can be slow and require a lot of effort. Investing internally to aid growth requires large cash commitments that the business may not have, so will need to come from a private investor. Partnering with an external investment company spreads the risk as it will generally mean the business will have more financial resources. You will also benefit from the expertise and experience of investment partners, many of whom will know how the process works.
For those looking to start this process, a local accountancy firm will often offer multi-service support. This is a sensible and easy place to start the discussion and explore your options. They will know how to prepare for any such deal and would be able to match you with brokers and others who know the market.
YOU SAID IT!
“I’ve been in this industry for over 30 years. I can’t tell you how many hours I’ve spent waiting in a queue listening to awful music on a tech support line. My experience today was second to none they both were so helpful and polite. You're doing a great job. Well done. I for one will never go anywhere else thank you.”
Alan Gaskell – AskNicely Review – 26 Aug