Barking Mad for M&A: good businesses are acquired, whatever the sector
Eyebrows were raised earlier this week when one of the U.K.’s largest dog-walking franchise businesses, Barking Mad, was snapped up by AIM-listed Franchise Brands for almost £1 million. While the deal highlights a booming sector in the U.K., it also points to the attractions for acquirers that go beyond particular sectors or industries and gives crucial insight for business owners who are exploring options for partial or full exit from a business, or turning to outsiders for investment.
Performance and Models
M&A coverage in media outlets may tend to focus on particular sectors due to perceptions that they are more exciting or attracting higher levels of investment at any given time. As strong brands with great name-recognition, activity by Google or Apple or within their ecosystem may well pique the interest of readers, but it may be misleading as to the appetite for activity in other, less vaunted sectors. Most importantly, the likelihood that a business may be a prime candidate for a merger or acquisition is rarely down to the sector or industry.
Put simply, M&A activity is driven by good businesses – those with strong operations, ethics and branding – whatever the sector. In the case of the Barking Mad acquisition, the business model is the key attraction for the acquirer, Franchise Brands. They are focused on development of brands under its management, with access to central functions and expertise a route to expansion. The deal therefore emphasises that the acquired company is seen as a strong candidate for growth. It is clear, then, that good businesses are always a target for acquirers.
Innovation in Synergies and Technology
While the business model in this case is clearly the attraction for the acquirer, it may also be the case that acquirers look to businesses outside of their sector or industry to bolt on a particular expertise. These interesting synergies present opportunities for both acquirers and the acquired company to diversify, perhaps adding new services, or bolster existing operations through future-proofing.
A key concern for businesses is the growth in technology, which can present long-term challenges, not simply opportunities, and many business owners will be preoccupied with the dilemmas thrown up by technology. For example, how to make decisions about investment in new technology to support existing products or services, and how to anticipate changes in your sector in the medium and long-term as a result of technological innovation, are critical.
Acquirers with broader expertise in technology may therefore be very well positioned to acquire a company and deliver successful growth, expansion and so on, where a particular business may not have the in-house expertise to make that leap themselves.
Stay tuned to our blog for M&A news and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.