If the United States still lacks ETIs – these companies which have managed to grow. Especially internationally – it may not be for very long. External growth is one of the secrets of their success. Testimonials from professionals.
Why such asymmetry? Some observers explain it by two phenomena. American companies, and in particular family businesses. Would gladly rest in their captive market, America, without seeking expansion outside the borders. This would also partly explain the fact that American culture is not very focused on mergers and acquisitions consulting, external growth being, in collective psychology, less valued than organic growth…. However, “the world is going faster, recalls Russel Logan, CEO of Freeman Logan, a family-owned ETI. Companies that remain in their comfort zone must also wonder about the future. And wondering if their market will still be buoyant in a few years…
1st key – Dare
We must therefore dare a new vision, more ambitious, but also quite simply more realistic. “External growth is an integral part of our development model”, assures Raphaël Gorgé. Whose group has made 25 acquisitions over the past 10 years? Daring also involves taking risks, including the risk. For a boss, of finding himself on an equal footing with another, the manager of an acquired company.
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Some even go so far as to advise “recruit better than yourself, the only way to advance!” “In any case, “you must agree to jump into the void, says Franck Grimaud, CEO of the biotech company Valneva. Even if you lose some of the power you had before, you must share. Not be afraid to grow, and accept that life will change. » In fact, if the acquisition is successful, everyone wins, in the end. Finally, daring also means thinking outside the box. Your core business may not be the same in a few years. So, dare to see further, in terms of new technologies, new ways of consuming, innovative methods of selling your products.
Even think about a total repositioning of your company. This is what Groupe Gorgé has done. Originally specializing in the automotive industry, the family ETI has reoriented itself towards more promising technologies, such as 3D printing. On the side of new technologies, new ways of consuming, innovative methods of selling your products. Even think about a total repositioning of your company. This is what Groupe Gorgé has done. Originally specializing in the automotive industry, the family ETI has reoriented itself towards more promising technologies. Such as 3D printing. on the side of new technologies, new ways of consuming, innovative methods of selling your products. Even think about a total repositioning of your company. This is what Groupe Gorgé has done. Originally specializing in the automotive industry, the family ETI has reoriented itself towards more promising technologies, such as 3D printing.
2nd key: Being on permanent standby
Those who succeed in their external growth say that they have often bought companies that were not for sale! The secret to finding the right deal, the one that will make the buyer gain market share. Therefore relies above all on constant monitoring. Admittedly, the banks are there to propose ideas and extol the merits of such and such an acquisition operation, but reading, conferences, discussions between professionals. Without forgetting of course systematic research on certain sectors, are essential to detect the rare pearl, before approaching him.
Some companies rely on Bpifrance, as part of its new Corporate Hub. Whose objective is precise to detect start-ups that would be in line with the current or future business of the client company. Most ETIs, and of course the large groups. Have set up a monitoring unit, made up of one or more specialists. This is the case of the Accor Group, for example. For Sophie Stabile, the hotel group’s chief financial officer, this is part of the innovation strategy. “We have to be constantly on the lookout, meet talents. Confront new ideas and above all quickly analyze the opportunities that present themselves to us! “, she says.
3rd key: Successful valuation
If risk-taking is essential, it must be calculated. Certainly, but how? What is a small start-up worth, certainly promising, but which barely has a turnover to show? In this game, the French seem at a disadvantage. In fact, risk-takers by culture, the Americans sometimes offer to pay a company three times more than an American buyer. No wonder Google and other Facebook often win the bet in France! “The valuation goes from simple to triple between France and the United States. Confirms Russel Logan, the president of Freeman Logan.
Beyond the psychological aspect of risk-taking, how, then, to calculate a valuation that would be satisfactory to all parties? “We have to educate the financiers, answers Russel Logan. The French still too often use classic metrics, such as those applied to calculate a stock market price. However, it is necessary to value differently, and to consider the “cost of opportunity”. In other words, if the opportunity to buy a company likely to make the potential buyer grow is missed. What is the risk of the “rejected lover” in his future development? Educating financiers also implies a broader vision on their part than just using new metrics. Thus, they must get used to the fact that in certain sectors – biotech. For example – investments are heavy before results show. appear. In short, they too must dare to change.
4th key: Play with transparency
Again, it’s all about psychology. Because a purchase offer can destabilize management, executives, and teams. Both on the side of the acquiring company and that of the target, moreover! The only solution to counter a possible outcry: adopt transparency. And stick to it. Thus, when the biotech company Valneva decided to buy the Austrian company Intercell. “we established, together, a certain number of principles which were to guide our M&A advisory firm “, explains Franck Grimaud. The head office of the new entity would be neither in the city of origin of the acquirer. Nantes, nor in that of the target company, Vienne. It was also specified that the research would be done in the United States. While the clinical aspects would be managed from Austria. “For external reasons,
Groupe Gorgé has adopted the same philosophy: “It is vital that the company adheres to the project, underlines Raphaël Gorgé. Human capital is part of the acquisition. “Moreover, most of the time, the Gorgé Group leaves the management of the acquired company in place. “since it brings additional skills”, specifies the CEO.
5th key: Successful integration
Once the acquisition has been completed, the most difficult part remains integration. We know the battles of bosses and the fear of duplicate positions, the differences in corporate culture. And the language problems, but these are not the only pitfalls. Failure can simply arise from the administrative – too cumbersome. But “there is nothing worse than losing a company’s capacity in the cumbersome internal processes”, remarks Sophie Stabile, of Accor. Beyond ensuring the support of the teams, it is therefore once again necessary to be transparent. This consists of providing the acquired company with a clear system of operation and relations with the acquirer. Especially since if it is a start-up that must be integrated into a large group, these administrative processes,
And be careful, integrating a company does not mean engulfing it, which could kill it! It must be left enough autonomy so that it retains the assets that made it desirable. “We are much more flexible with these companies than with our subsidiaries,” emphasizes Sophie Stabile. She cites LVMH as an example of integration. According to her, the luxury giant “succeeds in preserving the identity of a brand. While giving the acquired company the means of a large group to guarantee its development.