FINANCE
Jack Clipsham, Corporate Finance Partner, Kreston Reeves
SHOULD WE ACQUIRE KEY PARTS OF OUR SUPPLY CHAIN? As we enter a third year with the Covid pandemic continuing to dominate many aspects of corporate life, businesses with complex supply chains are looking to increasingly novel ways to ease delays and future pressures.
tion: suppliers are in your control providing greater security, there is a potential strategic advantage over competitors who may rely on the same suppliers, and there are welcomed additional revenue streams.
One of those measures is to create greater certainty by taking control of key elements of a supply chain through targeted acquisitions, says Jack Clipsham.
But, as with all corporate acquisitions it is not a decision to take lightly. It is a potential costly and time-consuming step to solve what is a relatively shortterm problem, and complex supply chains may not be entirely eased via one acquisition.
In November 2021 a survey of business leaders conducted by Kreston Reeves, ‘Shaping Your Future’, found that 52% of businesses are experiencing delays in their supply chains of up to six months. Over a third (34%) told us they are actively looking to acquire key parts of their supply chain to reduce those delays. Our research is supported by a signifi cantly increased deal flow in the last six months of 2021 with businesses looking to acquire a wide range of businesses in their supply chains, from specialist manufacturers through to staff recruitment agencies to ease key worker shortages such as HGV drivers. It is at first glance an attractive proposi-
28
www.platinummediagroup.co.uk
Let us assume that a business has identified the supplier it wishes to acquire and they agre e to sell. Business leaders will often under-estimate the time and effort needed to purchase and integrate a new business. They will need to be sure that the business can be acquired in a timely way to resolve the supply chain challenges before they might naturally resolve themselves, and they have the time to dedicate to integrating the new business without taking their eyes off the ball. Next, look to whether there is the expertise inside the organisation to integrate
and manage the new business. A manufacturing business, for example, may not have the expertise to successfully run a staffing agency business. If the senior management team in the target
One of those ❛❛ measures is to create
greater certainty by taking control of key elements of a supply chain through targeted acquisitions ❜❜
