Acquisitions – stimulating growth
Acquisitions have consistently played a key role in stimulating our growth. We continuously look to acquire niche businesses that will help us to enter new markets where we can grow organically, strengthen existing capabilities and market positions and build economies of scale, or access a new client base.
Adding value through acquisitions in 2009
In 2009, we spent £177.5m on 12 acquisitions. Our pipeline of potential acquisitions is healthy and in the first 2 months of 2010 we spent a further £16.8m on 2 acquisitions. We continue to be selective and remain disciplined when assessing opportunities.
Selecting appropriate acquisitions
We focus on acquiring small to medium sized businesses that bring complementary skills and services and strengthen our position in our target markets or expand our current reach. Expanding our presence through subsequent acquisitions and contract wins creates significant scale benefits.
To stimulate growth we generally seek target acquisitions that:
Rigorous selection criteria and pricing
Potential acquisitions are identified and brought to the Group by external consultants, people in our businesses, or direct approaches. We are highly selective and due diligence is undertaken at both Group and business level. All acquisitions are assessed, priced and agreed by the Group Board.
We tend to select acquisition targets that are:
- privately owned
- too small to interest the private equity market
- not in an auction – we aim to acquire without competition
- attractively priced, with scope to add value for shareholders.
This disciplined approach enables us to negotiate sensible purchase prices and terms, so generating good returns for the Group.
Smooth integration of acquisitions
We have substantial experience of successfully integrating acquired businesses and achieving synergies with our existing operations. Stringent due diligence, before and after acquisition, enables us to set clear targets for growth, integration benefits and profit. A dedicated project team manages the transition – bringing financial procedures, information and communications technology (ICT), HR, legal, compliance and marketing quickly into line with our standards. Acquiring only small to medium sized businesses enables us to integrate them into our existing business infrastructure efficiently and allows us to generate value faster.