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Over the last decade there has been a surge in the popularity of companies pursuing a “buy-and-build” strategy as a means of acquiring rapid revenue growth and penetrating markets that have relatively high barriers to entry. This charge has been led primarily by companies backed by private equity, which have been quick to realise the strategy’s potential for value creation.
Through a buy-and-build strategy, companies identify and acquire a platform company with a well-developed management team and infrastructure and then use those capabilities to acquire additional companies to achieve growth. The strategy can provide a dynamic and flexible way of expanding production, facilitating cross-selling or rolling out a technology on a larger scale.
For Maru Group, buy and build was the obvious route to go down in order to develop a presence within the market research industry.
The strategy behind Maru Group came from my experience running global operations for some of the world’s biggest market research and insights firms. The sector is dominated by a few large corporations and therefore has very high barriers to entry. It is also an industry in desperate need of a technological overhaul.
It became clear, therefore, that the only real way to achieve scale quickly so as to compete with the industry behemoths was through buy-and-build, backed by a private equity firm specialising in the strategy and corporate carve outs specifically.
In partnership with Primary Capital, our strategy would provide us with instant access to great technologies, infrastructure, a geographically diverse customer base, cash flow and importantly, highly talented employees. Our first four acquisitions have delivered against that strategy – bringing together market leading firms with high potential for growth, and technology platforms that can be proliferated at scale across the Group.
However, whilst buy-and-build might seem like a fail-safe way to achieve high growth and geographical expansion, there are a number of important cultural factors that need careful consideration. Over the last 18 months, I have observed that when looking to employ a buy and build strategy companies need certain skillsets.
1) Know the market and stay focused on the strategy
Whilst there may be a number of attractive companies on the market, only consider those companies that deliver against your defined strategy. At Maru, we look at whether a company will be able to help us expand our service offer, product offer and importantly whether it will bring with it fresh and exciting talent, which will fit in with our existing workforce.
2) Prioritise building relationships with the managers of the new company and their employees.
Business is and always has been a team game. When looking to expand through acquisition, it is important to remember the human dimension of build and buy. Treat your new acquisition as a strategic alliance, rather than a take-over. In doing so you will reduce any negative unintended consequences of integration, and create an environment in which companies can easily share knowledge and best practices.
At Maru, we firmly believe that disaggregation is a virtue. The Group acts as a platform, enabling our portfolio of companies to flourish, retaining their own individual cultures and identities, but united by a common belief in the value of technology-led research and insights.
3) Keep your clients front and centre.
Throughout any acquisition process, service delivery has to be sustained and reputation protected. The business must stay focused on maintaining its reputation to its existing customer base as well as to the one it is acquiring; as Warren Buffett clearly stated “it takes 20 years to build a reputation and five minutes to lose it. If you think about that you’ll do things differently.”
This means planning integrations carefully and sensitively to ensure clients are unaffected and experience no disruption to the service they are accustomed to receiving.