Posted: 21 / 12 / 2021

Article by Hannah Anderton, Corporate Finance Analyst at Sedulo

Unlocking M&A Driven Growth

The M&A market in the UK during the first six months of 2021 was running exceptionally hot, with more than 3,000 deals announced involving a UK company, an increase of 16% on the same period in the prior year[1]. The technology sector continued its strong appetite for M&A, but there was an acceleration of activity across all other key sectors, barring real estate. Encouragingly, activity was not just confined to London, and the South East, and all regions of the UK saw an uptick in deal volumes.

The appetite for M&A looks set to continue as 57% of executives[2] in a survey by EY said that they actively tend to pursue M&A in the next 12 months. Acquiring another business does not have to be the preserve of large institutional buyers, or private equity-backed businesses pursuing a buy-and-build strategy though. A strategic acquisition can add real value to smaller entrepreneurial businesses looking to kick-start or accelerate growth to the next level. In fact, a recent report from Bain, a consultancy, highlights that 45% of revenue growth over the next three years is expected to stem from M&A[3].


How are business owners harnessing M&A to proliferate their growth strategy?

A critical factor behind recent acquisitions has been executives’ desire to pivot to the changing consumer preferences that have emerged through the pandemic. They have acted fast to acquire the capabilities needed to facilitate repositioning of their value proposition and emerge as winners from the downturn and shifted industry landscape. For instance, traditional brick and mortar retailers, heavily impacted by lockdowns, have acquired specific e-commerce capabilities to quickly realign their business models to the rapid acceleration of online channels.

M&A will also prove invaluable in helping businesses recover and bounce back strongly from the significant shock that the pandemic inflicted – c.90% of executives reported both a decline in revenue and profitability in 2020[4]. The right strategic acquisition can provide access to new markets, build scale and allow a company to realise cross-selling and up-selling opportunities and other synergistic benefits.

Through the strategic acquisition, business owners can acquire new operational capabilities, a lever that is particularly important in response to disruptive new entrants causing a transformational change in an industry. In response to the changing landscape, targeted M&A enables business owners to acquire the new capabilities more quickly, and in some cases more cheaply than it would be to build the capabilities organically in-house. The wide and encompassing trend of digitisation is the area where activity is increasingly focused, with businesses acquiring companies such as digital marketing agencies and specific e-commerce offerings, as they look to enhance their digital and omnichannel offerings that have become increasingly important over the past 18 months.


How we can help?

If you are a business owner and are excited about the opportunities that the right acquisition can unlock or would like to learn more about the process, then please get in touch. The team will be happy to discuss opportunities and whether an acquisition could be the right strategic choice for your business.

If exploring an acquisition is of strategic benefit, Sedulo can guide you through the entire process, from identifying suitable targets, determining an appropriate valuation, structuring and funding the acquisition, to managing the diligence process and agreeing the transaction documents.



[1] Experian
[2] 2021 UK M&A and Strategy report | EY UK
[3] M&A Report 2021 – Trends & Outlook | Bain & Company
[4] 2021 UK M&A and Strategy report | EY UK