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Could 'Buy and Build' be the right growth strategy in today's market?

Growing your business organically in today’s market is not easy. However, there are other growth strategies your business can consider. One such strategy is the ‘Buy & Build’.

Buy & Build plays can benefit companies by opening access to new markets, increasing market share or future-proofing business models (amongst other positives). In addition, Buy & Builds should be more attractive in an economic downturn; in turbulent times, distressed assets represent a rare opportunity to acquire businesses more cheaply than would otherwise be possible.

However, Buy & Builds may not be right for every business. To assess the compatibility of this growth strategy with your business, consider the following criteria:

  1. Track record: Have you successfully integrated businesses in the past?
  2. Market size: A Buy & Build-friendly market is generally a large, fragmented market where there are numerous acquisition opportunities. An example is the optical industry, where there are over 5,000 independent optician practices in the UK.
  3. Knowing who to target: Do you have defensible criteria for identifying a potential target?
  4. Ability to move at pace: You will need access to capital and sufficient middle-management to integrate new businesses whilst you look for acquisition opportunities.
  5. Willingness to learn: Successful Buy & Builds require understanding between the acquirer and the acquired; this means you might have to adapt to new ways of doing business.

When achieving growth organically becomes difficult, it is important to know what options are available to grow. Before embarking upon a Buy & Build strategy, companies should spend considerable time and effort fully evaluating the market before deciding on the best companies to acquire. Often the first opportunity that presents itself is not the best target when embarking on a Buy & Build strategy.

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