I used to suppose M&A was just for large firms. My plan was simple: construct one of the best service, develop organically, and let outcomes converse for themselves. Acquisitions seemed to be company shortcuts taken by firms that would not construct shortly sufficient on their very own.
Then Straightforward Rental Companies got here alongside, and every part modified.
It was 2017, only one 12 months into GuestReady’s journey. Straightforward Rental Companies was a small property administration firm with about 100 properties and a succesful native crew. The deal was not large, but it surely supplied us with instant portfolio progress, skilled personnel, and operational insights that we had not beforehand thought-about.
That first acquisition labored nicely. It confirmed me that M&A will not be about shopping for your method out of issues or changing natural progress. When approached rigorously, it could actually speed up what you might be already constructing and assist scale back duplication in aggressive markets.
Since then, we’ve got checked out dozens of potential offers and accomplished ten acquisitions. Now we have gone from me cleansing residences myself to managing over 3,500 models throughout seven international locations. Round 80 per cent of our progress has been natural, however the remaining 20 per cent from acquisitions has made a major impression.
Utilizing M&A as an accelerator
Startups usually fall into two camps with M&A. Some see it as a magic repair, others as a distraction. In my expertise, it’s neither. M&A is a instrument, and its impression will depend on how and once you use it.
An acquisition not often means simply gaining belongings or revenues. It may additionally imply gaining folks, experience, and expertise that reshape the enterprise. For instance, François, now our CTO, joined via an acquisition and as we speak leads the event of RentalReady. Early expertise acquired on the identical time later developed into what grew to become the muse of our firm. Different acquisitions additionally introduced in colleagues who stepped into key management roles and helped strengthen the corporate’s capabilities.
These have been portfolio acquisitions, they usually have been additionally folks and expertise acquisitions. The mix of expertise, techniques, and market presence created worth far past the sum of particular person elements. Wanting again, the acquisitions that labored greatest have been those the place we purchased greater than revenues. They introduced clients, folks, and new capabilities collectively in a method that match naturally with our current enterprise.
Creating alternatives with out shedding focus
We discovered early that we couldn’t simply look ahead to alternatives to seem. Offers require us to be energetic in our ecosystem. This implies displaying up at conferences, sustaining relationships with rivals, and being seen sufficient that when somebody is considering promoting, they know we’re a possible acquirer.
On the identical time, not each alternative is value pursuing. For each good match, there can be many that aren’t. We handed on many of the firms we evaluated. The flexibility to say no shortly was as essential as recognising the suitable ones.
Smaller offers usually take practically the identical time and vitality as bigger ones, which makes alternative value very actual. We needed to be disciplined and give attention to conditions that would genuinely transfer the needle. This lesson was strengthened after a few of the smaller offers we made didn’t yield the anticipated outcomes.
One other issue is motivation. In founder-led companies, value is never the one consideration. Now we have seen circumstances the place others provided extra money, however the sellers selected us as a result of they trusted we might care for their groups and share a long-term imaginative and prescient. Cultural match usually ideas the steadiness.
Folks first, techniques later
One sample grew to become very clear to us. Integrations often fail when firms give attention to techniques earlier than folks.
It’s tempting to start with migrating databases or aligning workflows. However none of that issues if the individuals who constructed the acquired firm really feel not sure about their place sooner or later. We discovered to reverse the method. First, ensure that the persons are aligned and motivated. The techniques can observe.
This considering begins throughout due diligence. We attempt to perceive not solely who owns shares or holds a title, but additionally who carries actual affect inside the corporate. Offers can crumble if you’re not talking with the true resolution makers.
After the deal is completed, readability is what issues most. Folks need to know their position, their tasks, and what their profession path appears to be like like inside the larger organisation. As soon as that’s in place, the system integration tends to run extra easily as a result of everyone seems to be working in the direction of the identical consequence.
This strategy influenced how we developed RentalReady. As we built-in groups with totally different operational practices, our growth group labored immediately with new colleagues to know their workflows. Lots of these practices have been then included into the platform itself. In that method, every acquisition contributed not solely properties and folks but additionally concepts that formed RentalReady right into a platform now utilized by property managers throughout Europe.
Avoiding distraction
The actual hazard with M&A is the distraction that offers can create. It’s simple to get wrapped up in negotiations and take the attention off natural progress, product growth, and crew constructing.
For us, it was essential to know when to stroll away. If a deal didn’t clearly strengthen what we have been already doing, if cultural match felt mistaken, or if the combination regarded heavier than our crew may deal with on the time, we stepped again. Each deal must make one plus one equal three or extra. If one plus one equals two and a half or much less, the margin for error is just too low.
Acquisitions are additionally a poor method to cowl up weaknesses. If economics are damaged, shopping for extra models is not going to resolve it. If product-market match is shaky, buying clients is not going to restore it. For us, M&A labored greatest when it amplified strengths that have been already confirmed.
When acquisitions make sense
Not each startup needs to be fascinated with M&A, however the place markets are fragmented, acquisitions can typically be essentially the most environment friendly method to scale.
Just a few indicators that indicated we have been prepared: our core economics have been sturdy, our processes could possibly be replicated, our management crew had the capability to handle an integration, and we operated in a market the place consolidation introduced benefits. Briefly, we had a powerful platform that allowed for strong integration of acquired firms.
The very best targets are often firms doing one thing comparable in one other geography or these with complementary strengths. The riskiest are firms that push you into new enterprise fashions you don’t totally perceive.
A last reflection
Acquisitions take extra effort than it’s possible you’ll count on. Due diligence is sluggish and costly. Integration wants sources. Cultural gaps can undo every part.
However when it really works, it could actually change your trajectory. You acquire colleagues who’ve solved issues you might be solely beginning to face. You add clients who may need taken years to win. You scale back aggressive friction.
For us, M&A has by no means been about shortcuts. It has been about dashing up what we have been already constructing, whereas preserving our give attention to natural progress. Within the fragmented European market, that mixture has confirmed highly effective.
