Most acquisitions fail to deliver the value expected. However, those few companies that have strong, balanced capabilities in sourcing targets, executing the acquisition process, and integrating the acquisitions, required to deliver extraordinary shareholder value. This is the strategy of choice for many of the leading private equity funds and many of our clients.
The M&A marketplace has become increasingly competitive. This has resulted in higher price tags and lower win rates for bidders, while exclusive opportunities are increasingly rare. The most sophisticated acquirers have responded to this increased market efficiency by enhancing their proprietary deal sourcing capabilities. However, developing the internal resources, know-how, scale, and systems required to consistently generate proprietary opportunities is a formidable investment, which is out of reach for most mid-sized companies.
Most acquisition activity we see, even with the most sophisticated acquirers, is almost exclusively focused on active sellers — those business owners who have taken the initiative to hire an intermediary to shop their company to potential bidders. This limits choices to a very small percentage of potential targets and in those cases, the bidders are most likely in competition with each other. This increases valuations significantly while reducing a would-be acquirer’s chance of seeing the opportunity, let alone winning it. The result? Significant investment of time and cost in assessing low-probability opportunities.
Based in Arizona, Vensure is the most acquisitive and largest private Professional Employer Organization (PEO) in the United States. As Vensure sought to expand into Canada, the SVP of M&A selected Valitas to lead their Canadian acquisition program. Valitas researched approximately 1,000 potential acquisition targets and approached more than 30 of them. The strategic dialogue was opened with more than 40% of these targets. In July 2020, Vensure completed its acquisition of Ouipay — marking Vensure’s entry into the Canadian market. Vensure intends to acquire more companies in Canada to build on its presence.
Most of our acquisition program clients are large, sophisticated global acquirers. They choose to work with us for four key reasons:
By approaching both passive and active sellers, we dramatically expand their target universe, creating competition among the sellers.
We quickly earn the trust of business owners. To date, we have opened dialogue with more than 50% of the targets contacted.
With Valitas sourcing qualified, proprietary acquisition opportunities, they are able to keep their focus on executing the transaction process, due diligence, and integration.
They control the process regardless of how many actionable targets are in the pipeline.