Kevin Uphill - Avondale
Avondale achieves strategic values far beyond financial predictions
Avondale are the UK’s leading M&A boutique specialising in the SME sector - achieving strategic values far beyond financial predictions. They provide unrivalled business sales, acquisitions and strategic growth solutions with a success rate second to none and are the Institute of Directors' preferred provider and won 13 M&A industry awards in 2015.
We spoke to chairman, Kevin Uphill, ACQ Game Changer of the Year 2015 and author of “Creating Competitive Advantage” recently published by Kogan Page about how he consistently manages to achieve success for clients and grew the practice by 25% last year.
Q. Can you tell us more about yourself and your role at Avondale?
I founded Avondale over 25 years ago and have enjoyed a long and successful career as an entrepreneur, strategist and business sales and acquisitions adviser. I’m passionate about business and its role in economic and social success. I have written 3 business books, the latest of which is “Creating Competitive Advantage”, recently published by Kogan Page.
Q. How did you find yourself in M&A, what’s your history?
I started my career at NatWest bank. This gave me an in depth finance, mergers and acquisitions knowledge. After identifying a niche in the commercial business sales market, I founded Avondale, and led the company to become the leading SME M&A boutique. To date I have personally facilitated the completion of around 300 deals.
Q. What developments have you seen in the past three years?
The past 3 years have been hugely challenging for all involved in business. We’ve been through the recession and are coming out other side. People are more risk adverse and take more care when buying businesses. We’ve seen more structured deals and deferred payments. Funding has also been harder to obtain, although that is improving. Sellers also sat on the fence during the recession; those that really want to sell are doing so now, and lucratively. However, the climate is also conducive for those entrepreneurs who wish to increase their business value prior to exit. Acquisitions have fueled M&A activity in the slow grow economy, as organic growth has been difficult. The PE market is driving multiples up as funds look for yields.
Q. Will you tell us more about the processes you are applying this year…
We are spending a lot of time working with business owners helping them to not only accelerate growth but also to gain competitive advantage – making them a must acquire asset for those wishing to conquer and rule the market.
Q. What are your 5 top tips for a successful acquisition?
- 1.Prepare – make sure you’re growth strategy is clearly defined so you don’t get swayed off course by the attraction of an acquisition that may not be right. Make sure you organisation is adequately structured to facilitate a successful merger. Ensure your capital investment requirements and funding facilities are realistic.
- 2.Carefully define your acquisition criteria. This will keep you aligned with your long term growth objectives and help you compare acquisition alternatives.
- 3.Fully understand the target company. Obtain as much information as possible, financials, client breakdown, staff, premises etc.
- 4.Negotiate and get the right deal. Ideally look for a win-win situations so all parties are happy. It is likely you will have to work with the seller for at least a year. Identify must wins and can lose items to win negotiations. Make sure you gain economies of scale, synergy and increased shareholder value.
- 5.Invest in integrating. This critical stage is often overlooked and it is here that many mergers fail. Put a plan together, cover all areas, and include key members of staff – including those that might not be obvious. Maintain motivation and communication.
Q. 2015 saw huge developments and growth in the M&A market, what are your predictions for 2016?
The UK has made steady economic progress but we still have a long way to go. The 2015 0.5% growth was disappointing in comparison to the projected 0.7%. Interest rates were due to rise early in 2016; this is now forecast later in the year with some economists predicting no change until 2017. Collapsing oil prices and volatility in China have caused a drop in inflation and a sluggish UK growth rate. The EU referendum and the Middle East crisis may also affect our route to recovery.
All is not doom and gloom, we will continue on a path of momentum positive drivers should outweigh the negative and with the current pace of recovery, we should be in a position to navigate around the economic obstacles.
Looking at M&A activity, we predict that activity levels will remain high. Interest rates will remain low, funding will remain readily available, the UK will continue to attract international buyers, growth by acquisition will stay the preferred route and confidence in the economy will continue to be strong all of which points to sustainable and increased M&A deal values and volumes.
Whilst I have no crystal ball, everything points to a positive momentum in 2016. Sell or grow; whatever you do make hay while the sun shines. Most importantly, as Mark Carney (Governor, Bank of England), what’s important is to do “the right thing at the right time”. Plan and make sure you get it right.
Q. In your opinion what were the main factors driving the growth we saw in 2015?
Confidence in the economy! M&A is often seen as a barometer of the economy and in 2015 was set fair to good. This was not only reflected in deal volumes and values, but also in the speed of transactions. During the recession deals were taking an average of c. 5 months from HoT (Heads of Terms) to completion, in 2015 this was more like 2-3 months with buyers eager to complete as soon as possible.
A slow growing economy makes organic growth difficult. Expansion via acquisition is far easier and can be less risky. Low interest rates meant that companies and private equity funds with cash reserves were earning negative returns and turning to acquisitions as a way to invest money in growth initiatives.
The banks’ efforts, over the past 7 years, in rebuilding their balance sheets and improving risk management are paying off. Corporate credit has recovered strongly and lending to small firms is growing meaning that funding is more readily available.
All of these factors results in hungry buyers which in turn leads to higher values, multiples and sellers being happier to exit.
Q. As a respected speaker and leader on business strategy, what’s the best advice you can give for buying a business?
Get the buying criteria right, know yourself and where your strengths and weaknesses are. The best acquisitions are ones that offset your weaknesses. Look internally, which new products, strategic alliances, territories and recurring revenue could benefit your organisation? What do you need to get to reinforce your own shareholder value?
Also important is due diligence, most people spend all their money on the commercial and financial due diligence. But the majority of transactions fail around the people and also the customer relationships. Increasingly we are finding the companies succeeding spend more time checking the cultural fit and also the customer relationship.
Q. What unique ideas and solutions does your work have on your business?
My passion for successful business has a constant impact on Avondale and our clients. I am constantly looking at ways to improve our services in my strive for perfection. Our game changing strategy division and constant developments are a clear reflection of this. Pioneering products such as virtual data rooms on smaller deals where this has not historically existed and value builder support for all sale projects as standard create a stand out position with genuine unique services.
Q. What defines Avondale as a Gamechanger in the market?
Avondale achieves strategic values far beyond financial predictions for our clients. We work closely with them ensuring that no stone is left unturned in achieving their ambitions.
Outstanding research, processes and careful positioning ensures for better quality auctions for higher quality assets. Combine this with years of experience and expertise in deal structures and project delivery and you have increased delivery of superior deals. This helps both buyers and sellers. Lateral thinking to find better strategic buyers adds value and imaginative deal structures such as elevator deals help maximise the partnership required for both sides to get better deals.
Q. In your opinion, what are the key attributes to fit the “Gamechanger” title?
Vision, agility, leadership, communication, grace and creativity. Specific to M&A, better deal structures, risk management, creativity and entrepreneurship in building both buyer and seller strategy to make better deals.
Q. What motivates you as a business?
Success for both our clients and Avondale; providing trusted advice is a key part of Avondale’s culture and also crucial to our success. Our advisers have genuine business acumen and work closely with clients to ensure they achieve, if not exceed their ambitions. The majority of our work comes from recommendation, further recognition of our ability to succeed, technical abilities, strong service ethos and principles led approach.
Q. What does success mean to you?
Being recognised for delivering and creating something positive, different, better and admirable; and having fun whilst achieving it.
Q. What are the qualities a person must possess to be successful in business? What is your best advice to aspiring entrepreneurs and businesses out there?
Vision and flair with clarity and focus, whilst always managing the risks. Taking the time to look further ahead and see things others have missed. Turning this to opportunity and driving at the opportunity with founded self-belief. Knowing when to say yes and when to say no, and being responsive.
Q. Where do you see yourself in 2020?
Here. I like what I do, bigger better deals, with a strong team driving growth.
Q. What does the future hold for Avondale?
We achieved 25% growth last year, and, bar economic barriers, we aim to repeat this with a continually expanding team. Talent is critical and that’s our big conversation. We know we do and can get the best deals. Sharing that story will continue to position Avondale not just as experts but a brand to aspire to.