Business Buying Strategies from The Dealmaker's Academy

Mastering Buy and Build Strategies for Business Growth

Mar 21, 2024

Unlock the secrets of the Buy and Build strategy and how it can transform business growth. Discover the differences between acquisition and organic growth, and why financials are critical for success. Learn how to validate business models and select high-quality acquisitions. Explore the importance of effective management and cultural integration post-acquisition. Plus, get insights on cash flow management that can elevate your business to new heights.

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INSIGHT

Buy and Build Strategy

Buy-and-build, favored by private equity, creates value by combining businesses.
Acquisition growth provides faster customer acquisition than organic growth.

ANECDOTE

All Seas Capital and Hakeem Group

Jonathan Jay interviewed the managing director of All Seas Capital, a private equity firm.
Their first acquisition, Hakeem Group, consolidated 80 optician practices, then 300 more during the pandemic.

ADVICE

Partnering with Private Equity

Prove the buy-and-build concept to attract private equity investment for faster growth.
Partnering with PE brings rigor, tough questions, financial power, and exit strategies.

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In the latest episode of the Business Buying Strategies podcast, Jonathan Jay reveals the rules for executing a successful Buy and Build strategy.

The Buy and Build strategy is a popular with Private Equity firms. It involves acquiring multiple businesses and rolling them up together to create a business worth far more than the sum of its parts.

However, there are plenty of risks along the way for the inexperienced dealmaker.

In this episode recorded during the Dealmakers Retreat in Marbella earlier this year, Jonathan explains the benefits of using a Buy and Build strategy and how to avoid the potential challenges that come with it.

He highlights the important differences between organic growth and acquisition growth, the principle of increasing a business's value through strategic acquisitions, and the crucial role of getting financials right.

Jonathan also topics like validating the business model, managing people effectively, selecting quality businesses, de-risking by tying in the seller, and the reason why you might choose not to consolidate your acquisitions into one overarching brand.

If you are looking to rapidly increase the size of your business through acquisition, you need to listen to this episode.

Here are the key highlights:

01:50 Exploring the Buy and Build Strategy

03:19 The Power of Acquisition Growth

04:23 Leveraging Private Equity for Business Expansion

06:58 The Financials of a Successful Buy and Build

13:21 Networking and Valuation Insights

14:19 Validating Your Business Model

18:31 The Importance of Investing in People

24:14 Day-to-Day Management and Quality Control

26:19 The Significance of Buying Quality Businesses

27:48 The Importance of Choosing Quality Businesses

29:06 De-risking by Tying in the Seller

32:45 The Strategy of Non-Integration in Business Acquisitions

34:05 Managing Change and Cultural Integration

37:52 The Critical Role of Cash Flow in Business

43:39 Building a Strong Head Office Management Team

46:42 Embracing the Journey of Becoming Better Business People

Here is what you will discover…

Why everything takes longer and costs more than you expect going through your first acquisition (the next acquisition is always easier)
Why your biggest challenge integrating businesses is staff (and what to do about it)
Why you need to be clear on your exit objective to drive your Buy and Build strategy forward
Why you should never overpay for a business (even if it feels like a must-have)
Why understanding deal multiples is key to a highly lucrative exit (when you play the Private Equity game)
Why training your staff is the secret weapon to growing your business
Why you need to be aware of your flaws so you can hire people who meet those needs
Why the day-to-day management of a business has to work without your involvement (unless you want another job)
Why you have to keep a close eye on cashflow while pursuing a Buy and Build strategy

** Looking for a great acquisition lawyer in the UK? Use mine! **

If you are looking for a lawyer in the UK to help you get the deal over the line, then use my own lawyer, John Andrews. You can phone his office at (0345) 2412494 or email him at johnandrews.deallawyer@jmw.co.uk.

Ready to get started?

Here’s how you can start your business buying journey…

Watch my FREE Dealmakers webinar training:

https://www.dealmakerspodcast.com

Get a FREE copy of my book:

https://www.thedealmakersacademy.com/free-book-giveaway

Join the Business Acquisition FastTrack course

https://www.thedealmakersacademy.com/quick

Already bought a business?

if you've already bought a business, you should be part of my Inner Circle group where we discuss raising capital, integration management, and exiting. Email Maria on hello@thedealmakersacademy.com for more information.