Supporting acquisitive growth in the North West
John Clarke, Partner in LDC’s North West team, writes for TheBusinessDesk.com about how a well-executed buy-and-build strategy can create scale, and the ways in which the private equity investor is supporting ambitious management teams across the region to pursue acquisitive growth.
It’s testament to the strength of the North West economy that, despite so many challenges in the past few years, the region’s M&A market has remained active. In fact, recent KPMG data revealed that, while North West investment activity cooled slightly during the first half of 2023 compared to the same period last year, the region remained the busiest outside of London, according to KPMG’s 2023 Mid-Market Private Equity study.
Across the board, acquisitions accounted for the majority of all transactions.
In 2022, LDC provided £38m of follow-on funding to support 19 portfolio companies to complete 44 acquisitions nationally, helping them to scale and diversify by bringing on board established operations.
Resilient and fast-growth sectors like technology, which is both fragmented and holds vast value creation potential, see a lot of buy-and-build activity but, regardless of the industry, acquisitive growth strategies can make a significant difference when it comes to building resilience and unlocking scale.
It’s why it’s perhaps no surprise – against the challenging economic backdrop of recent years – that more of the conversations we’ve been having with management teams have focused on acquisitions, and in particular their desire to diversify their companies’ products and services, strengthen market share, and target international expansion.
We work closely with those management teams to help them map out the market their business operates in and explore new markets, review potential areas for growth and identify possible targets.
One example of this is our support of international marketing, technology and insight group MSQ’s £20.6m public-to-private acquisition of the Be Heard Partnership, a group of agencies specialising in digital transformation, data and insight, and digital media. This added brands such as Vodafone and Nestlé to MSQ’s roster and created a combined global workforce of more than 750 people. The transaction was a major turning point for the business.
Since the start of our four-year partnership in 2019, we supported MSQ’s CEO Peter Reid and his team’s buy-and-build journey and, during that time, we helped the company to acquire five complementary businesses. In total, the acquisitions helped MSQ increase revenues from around £50m to £125m, more than treble EBITDA from £6m to in excess of £20m, and more than double headcount from 550 to 1,200 during our partnership.
Alongside funding, we have deep experience in helping management teams integrate the businesses they’ve acquired into their own. A good example of this is Manchester headquartered digital transformation specialist CTI Group.
We first partnered with CTI’s management team in February 2022 and, the following July, the Group acquired app development agency Silverchip. The addition of multi-award winning Silverchip’s team of mobile experts helped to further expand CTI’s offering to current and future clients. The business now plans to explore new international territories, and open new offices to support its growing customer base in the US, Europe and Asia. Its ongoing buy-and-build strategy is central to those plans.
Despite a challenging macroeconomic environment and market uncertainty, I’m confident the effective use of buy-and-build growth strategies will help to drive increased levels of M&A activity across the North West in the months ahead. We look forward to supporting more of the region’s management teams to achieve their ambitious growth through targeted acquisitions.
LDC is a sponsor of TheBusinessDesk.com’s North West Business of the Year Awards.