By Declan Savage, Director at Translink Corporate Finance UK
The ‘buy-and-build’ strategy has become an increasingly attractive growth model for private equity investors aiming to build scaled, efficient businesses that can achieve premium exit multiples. While widely adopted, the differences between domestic and international buy-and-build approaches – and the strategic considerations they require – are often overlooked.
Domestic vs international buy and build
Domestic buy and build strategies are often the easiest and most practical to implement, both from a deal sourcing and integration perspective. Portfolio company (‘Portco’) management teams typically have a strong awareness of the market and have already formed relationships with the key decision makers.
Financial information in the UK is relatively accessible and there are minimal language or external cultural barriers to deal with. Value is primarily created through multiple arbitrages, operational efficiencies, market share gains and cross selling opportunities
International buy and build becomes significantly more complex and challenging. Potential target businesses are often very difficult to identify and engage with, for a number of reasons, including:
- A lack of awareness on the entire competitive landscape in overseas markets
- Publicly available financial information varies from country to country but is often very limited compared with the UK (particularly in the USA)
- Language and cultural barriers make it tricky to quickly engage with and then build rapport with targets
- Project managing individual deal negotiations with multiple targets across different geographies is more difficult
- Legal and regulatory differences
Translink CF’s value added approach
At Translink Corporate Finance we have significant experience in navigating these challenges on behalf of private equity investors and their Portcos. Our clients benefit from having local, ‘on the ground’ teams in their target country(ies), who speak the native language, understand the cultural nuances that may exist and are able to leverage their own local market intelligence.
- Europe
We have advised several private equity backed businesses to successfully execute cross border acquisition strategies across Europe. This involves working closely with our local Translink offices to:
- Define acquisition criteria
- Prepare a high-quality list of targets
- Engage with key decision makers
- Negotiate transaction structure and project manage through to completion
One example is our relationship with our client Miss Group, backed by Perwyn Capital. We have advised Miss Group on 25 acquisitions since 2017 across six countries.
Fredrik Ullberg, Partner at Translink Corporate Finance Sweden, says: “We have long-standing relationships with our clients that are established by closely working together to understand the business and its strategy.
“Together with our global teams, we actively identify and predict new market opportunities. This helps you become very precise in suggesting the right targets and ultimately leads to a higher completion rate.”
- North America
Translink also has a long history of executing buyside transactions in North America, particularly for private equity investors. Our dedicated buyside team has developed a proprietary database which holds information on over 570,000 privately held North American targets, covering 95% of all businesses with revenues over $15m.
The database not only contains operational data points (including financial information), but also situational characteristics including succession planning and sale intentions. This provides access to potential targets.
Mohit Mehta, Managing Director, International Business at Translink Corporate Finance partner in the USA, says: “Translink’s buyside deal team in the USA utilises its proprietary database to identify exclusive, off-market opportunities for our clients.
“This approach allows clients to engage directly with target companies and negotiate on a bilateral basis, free from the pressures and pricing dynamics of a competitive auction process, leading to deal multiples that are below market average.”
If you’re considering an international buy-and-build strategy or simply want to discuss market dynamics further, contact our team: https://translinkcf.com/teams-and-offices/
Translink International AG
