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More than half of Australian business owners are considering acquiring another business this year, with nearly 15 per cent saying an acquisition is “likely”, according to a survey by HLB Mann Judd.
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Business owners eyeing acquisitions
12 May 2015
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The high expected rate of acquisitions comes as business confidence in increasing profitability lags, with the survey revealing just over half of business owners have “low confidence” of improved profitability during the year.
Simon James, corporate advisory partner at HLB Mann Judd Sydney, said an acquisition can be a successful strategy to increase the profitability of a 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.”
The first 100 days following acquisition, according to Mr James, 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.
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“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 more than 80 per cent of business owners were unlikely to exit their businesses in 2015 – a finding that indicates a favourable environment for the 20 per cent of owners who did want to exit, 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 the business is sale-ready to take advantage of any sale opportunity.”
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