Jim Clifford OBEThere seems to have been so much in the news over the last week looking back at the events of earlier years and how they've affected people’s lives: the WW1 anniversaries; the opening of the 9/11 memorial; and various City failures, to name but three. They have touched our lives, but also the way we think. They encourage us to change direction and explore new approaches. Thinking of those past and current City failures, I recalled the financial crisis six years ago. Much has changed since 2008. Whether a result of the banking crash or general political change or otherwise, private sector businesses and social enterprises have had to embrace change, yet still deliver value. In doing that we are now seeing a common thread of social consciousness emerging. The social sector is focusing on increasing the effectiveness and reach in delivering social value. The private sector is being encouraged to recognise that in delivering social value it engages better with potential customers and improves staff relations, so delivers better profitability.

In that growth and improvement, the private sector has long embraced both organic growth and acquisition. Finding the right target, pricing and funding it, and integrating it effectively have been widely researched and commented-upon. Why then do we so rarely hear of charities and social enterprises growing by acquisition? Is it that they do and don’t call it that, or that they don’t do it at all? I suspect it’s a bit of both.

Whether for socially-focused "profit with purpose" businesses, and for the social sector equivalent, there’s gain to be had in acquisitions, but what is it? Six areas stand out. Firstly, and most obviously we can acquire simply for increased profitability, which adds supporting value in terms of cash flow to other areas of the business. Secondly we can gain the benefits of more effective use of resources from putting several businesses together. Those are perhaps the two that most would identify, but there are more besides. The third is that we can also use an acquisition for risk management within the wider business: using highly stable cash-generating operations to de-risk a broader set of operations, or de-risk them using other aspects of the acquired business such as know-how, extra customers, or key services.

Fourthly we can use the acquired business to enhance service reach: we can cross-sell services or products from our other businesses to the newly acquired customers or service users. We can bring wider benefits – enhanced outcomes – to them. Fifthly we could also use the skills and services acquired to enhance the outcomes from our existing operations, by enhancing the service delivery in quality, continuity or reach.

Sixthly, and perhaps most importantly, we can enhance brand and positioning by a successful acquisition. This can come through association with a successful acquired operation, through the profile gained through the acquisition itself, or through the additional benefits brought to the acquired customers or service users after acquisition.

All six of these make sense for the private sector business, the “profits with purpose” one and the socially-focused. Finding and gaining the value from them requires careful planning, action, and energy, but the benefits can be well worth it. New thinking – new gains – new outcomes: the opportunity is there.

Jim Clifford OBE


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