Steve Bonnici, owner of Urgent Couriers talks to Gill South about his acquisition experience:
On the April 1 2011 Urgent Couriers acquired the business of Inter City Urgent Couriers. This was the largest acquisition that Urgent Couriers has made to date and increased the size of the business by around 25 per cent.
Acquiring Inter City Urgent Couriers was attractive because of the following similarities to Urgent Couriers
- It was not a known discounter so prices were similar
- It tried to reward its owner drivers fairly.
- It gave a personal service and seemed to have very loyal clientele
- It had real strength in medical supplies deliveries
- Its vehicle fleet was relatively modern
1. Acquisition provided an immediate boost to profitability as the business could be rolled into Urgent Courier's operations without a corresponding increase in overhead.
2. Inter City had started a truck service that was a welcome addition to Urgent Courier's services
3. Urgent Couriers gained some very experienced operations personnel who had a great rapport with customers
4. UC gained some significant clients in geographical areas and industries that complemented its own client mix
1. Retaining clients purchased in acquisition is not a given, they use it as an excuse to look around at what the competition is offering.
2. The competition see it as an opportunity to aggressively attack the recently acquired customers
3. Even with the above similarities the cultures will be different and the transition needs to be handled delicately as both teams are nervous about the change and will feel threatened by new people and new systems.
4. Employees from the acquired company that are not offered new positions need to be managed very well or they can be destructive to the process.
1. Initial communication to new clientele and employees needs to accurate, and regular
2. Get face to face with the major clients of the newly acquired business as soon as the deal is signed because the word gets out and they need to meet you early before they hear it from other sources
3. Ensure it is as close as possible to business as usual on day one so there is no excuse for clients to shift to the competitors
4. Keep key client facing employees as part of the mix going forward to ensure continuity
5. Bring both teams together before the start date so they have a chance to get to know each other in an informal setting.
6. Involve as many of your existing team with training the new team members. We brought the new team members into our office for training prior to the merger to ensure they were comfortable and familiar in their new surroundings.
During the process I discussed the acquisition with my accountant Barry Hare from Hayes Knight and with my bankers. The bank I had been with for 12 years was very risk adverse and I ended up changing banks during the process. Barry and his team were very helpful with making introductions to the new bankers and also with checking the forecasts that the bank required.
Does acquisition make sense?
The acquisition of Inter City Urgent has worked out well for Urgent Couriers for the reasons described above. A key learning for future acquisitions is to communicate as early as possible with clients and employees. If the right acquisition opportunity comes up in the future we would consider it as acquisition has the double bonus of an immediate increase in revenue and the removal of a competitor.
So many SME owners are running their businesses in the moment, they are too busy trying to succeed to think about how they will move on from the business at a later stage. A large number of business owners have given little thought about succession if their company is still sustainable and has a good future.
Tell us your stories of your exit plans, how you are readying the company for the next incumbent. Email me, Gill South, at the link below: