In this first video of our Deal Insight series, we talk to serial entrepreneur Jonathan Jay about his experience of growing a company through acquisition.
The transcript of the interview follows:What was the first business that you bought?
Well the first business I bought actually I really bought it by accident because it wasn’t something I set out to do. It was unintentional.
It was a Sunday afternoon - I received a phone call from my fiercest competitor and I thought why is the person I hate the most calling me on a Sunday afternoon? And it wasn’t a mistake, I thought maybe he had phoned me by mistake.
He said “Jonathan, I would like to meet with you, would you come up and see me?” and I was a little suspicious, I thought why does my competitor want me to go and visit? So he said “would you come up tomorrow?” so we made the arrangements and I went up to see him the next day.
Now what I didn’t realise is just because someone has a glossy website, it doesn’t mean that behind the scenes things are all going according to plan and in this particular situation, things weren’t going according to plan. They had actually been running at a loss for a period of time. I didn’t know that, no one really knew that.
They had a turnover of staff that wasn’t great, and things were just starting to fall apart. The owner had had a personal issue, there had been some illness and he just wanted to get out.
So I had this meeting on the Monday afternoon and by Friday of the same week, I owned the business. We did a very very fast deal, I bought the assets rather than the shares, and of course, there is a big distinction between the two, and by the following Monday I was in their office as the new Boss.
And that made a huge difference because it increased the size of my business, because they were doing pretty much the same thing as us and in actual fact when I sold the combined business a little while later, I doubled the sale price because now I had a larger company to sell.-------
It is often easier and quicker to grow your business through acquisition than organically. Look for companies similar to your own or target businesses you can acquire to grow your business quickly. Also know who your competitors are in the industry, if you have connections within the industry and someone is struggling, they may call you offering a deal, just like Jonathan did.
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