Growth Through Acquisitions: Fractional Corporate Development
Jul 13, 2022
Ryan Goral plays a unique role in the M&A space. He is the founder of G-Spire Group - a company focused on helping entrepreneurs, executives, and small business owners to grow through strategic mergers and acquisitions.
He provides fractional corporate development executive services, which means he comes in as an executive fractionally. Ryan’s expertise is centered on adding value to entrepreneurs from capital structuring, advising strategy fit, and conducting through final transaction execution and integration. If you’re an owner, or operator of a smaller and middle-market business trying to grow through acquisitions, this episode will help you.
Growth Through Acquisitions Matters
Organic growth is a great strategy. However, according to Ryan, it can’t take you too far, as small or midsize businesses usually lack a large and qualified sales team. The way out is to expand through acquisitions, not simply to be a bigger company, but to avoid being absorbed by larger companies . When entering the acquisition process, Ryan shares some advice to think more strategically about your business…
First, You Need Strategic Thinking
Ryan explains that before starting their acquisition process, business owners should conduct a strategy review. To begin this strategy, ask yourself:
- Where do you want to be three, five, or ten years from now?
- Where are you going with your business and why?
Those questions will make you set your schedule and be able to get plans off the ground by making it easier to see the goals.
Investing in An Integration Plan
Due diligence processes can suck you in - especially when you are dealing with banks, or raising some equity, or maybe you have lawyers and CPA reconciliations. It can be difficult for an inexperienced small company to get involved in a larger transaction. Some important details cannot be overlooked.
An integration plan is required - a plan that details step by step for this acquisition. To begin this planning, schedule the first 60 or 90 days. That way you avoid eroding the value of what you just spent. A tip to start this planning is to keep these questions in mind:
- Who is communicating what to who?
- What are the key messages you want from the people you are trading with?
Understanding Enterprise Value
Do people in the corporate world really understand the concept of buying to create enterprise value for eventual sale, or are they more driven for other reasons to do acquisitions?
To explain this, Ryan uses an example from a million dollar company. You can buy it and over time, turn it into two or three million dollars’ worth. In this way, you just created value through the transaction. Some people don’t understand why those multiples, which is the business' valuation, goes up. This is mostly because these companies are less risky, as they have more customers and cash flow. We don’t want to go buy a box of parts and say we did an acquisition; we say that we did a value enhancement.
The Right Way of Growing Through Acquisition
If you don’t have the executive team - like most smaller and mid-sized companies - planning acquisitions can be an enormous distraction for the owner which should also focus on the day-to-day operating demands of the company. In many negotiations, business owners without experience can get carried away by emotion and do not have a technical view of the deal they are in.
Ryan's final lesson is that entrepreneurs should focus on building a support network when making acquisitions. Ryan recommends hiring experts, as they have a different perspective and can take the weight off your shoulders in dealing with these acquisitions. Build an advisory board with CPS, lawyers, and other consultants to make a better deal.
Listen to the full episode here.
To connect with Ryan for more:
Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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