The growth strategy can be both enabled and de-risked with the support of private equity. Two-thirds of our 90-strong portfolio are actively pursuing acquisitions to help them gain a foothold in new domestic or international markets, diversify product and service offerings, or consolidate market share.
We helped our portfolio management teams to complete 35 bolt-ons in 2020 alone.
Matt Parker, CEO of unified communications and cyber security solutions business Babble, was keen to drive market share through acquisition. We partnered with Matt and his team in 2017 and over the following three years, we provided £9m of follow-on funding to help them acquire six complementary businesses.
“I saw the opportunity to do a ‘buy and build’ and go on a really exciting journey,” Matt says. “We have acquired six businesses in three years; four during 2020, despite two lockdowns. Buy and build is absolutely the best way to achieve a steeper curve on the growth of your business. It would have taken a decade to achieve the same growth through an organic approach alone.”
This journey saw revenues increase by 230 per cent and Babble’s management team are now well on their way to achieving their target of reaching £100m in annual turnover.
It would have taken a decade to achieve the same growth through an organic approach alone.”Matt Parker, CEO
Linley & Simpson
With the right capital and support, private equity-backed buy and build can be a way to scale at pace. Will Linley, Co-Founder of Linley & Simpson, a market-leading residential lettings and sales agency, had made acquisitions before, but investment from LDC super-charged his buy and build strategy.
“By the time we did the deal with LDC, we had bought 20 businesses in 20 years. But that was nothing compared to last few years, where we really stepped it up a gear, making eight to 10 acquisitions a year. LDC really believed in our business and growth strategy,” Will explains.
During our initial two and half year partnership, the business made 18 acquisitions, doubling its portfolio. In January 2021, as a continuation of the strategy, we announced the £100m merger of Lomond Capital and Linley & Simpson. The new group has a combined portfolio of over 22,000 properties under management and major hubs in private rental hotspots across the UK.
Securing the support of a private equity partner makes your business grow up and reach a new level.”Will Linley, Co-Founder
Linley & Simpson
For those in highly fragmented sectors, buy and build represents an opportunity to consolidate a firm’s position in the market.
Duncan & Todd Group
Duncan & Todd Group is Scotland’s best-loved chain of opticians led by Managing Director Frances Rus. In 2018, Frances secured investment from LDC to fuel the next phase of expansion, creating a new audiology division and accelerating her acquisition strategy. “Buy and build is the absolute best model for my kind of business,” she says.
The previous owners were growing the business through cashflow alone, but the model was “slow and hard to build real momentum”, she explains. That has changed. “We now manufacture our own lenses, so we can instantly make any business we acquire more profitable by switching to our products, which brings economies of scale while improving quality of our service for customers.”
“We planned to make five acquisitions a year and ended up doing 16 deals in 13 months,” Frances says. “This is just the beginning. We’ll be stepping up our game in 2021. If a good deal came up in England, I would now consider it,” she concludes.
It is clear that whatever the objective, well executed acquisitions can be an effective way of creating resilience and scale. And we expect it to be a growth strategy that continues to play out prominently well into the year ahead.
Private Equity not only allowed me to buy great businesses but also gave me the ability to invest – so we could make the most of the growth.”Frances Rus, Managing Director
Duncan & Todd Group