What Elon Musk’s recent bid for Twitter tells us about acquirer motivation.

As Elon Musk’s proposed purchase of Twitter, Inc. stalls this week, the move poses an interesting question: what exactly motivates an acquirer, individual or company, to buy a business? An acquisition of Twitter was, after all, the least obvious strategic step for the Tesla, Inc., and SpaceX founder.

It’s clear that any acquisition in the current economic climate will not be undertaken lightly. Energy price inflation, low growth markets, and socio-political instability, all mean that shrewd acquirers are seeking acquisitions that can deliver immediate strategic returns, amidst ongoing market turmoil.

Growth potential is certainly a key acquisition driver, as was the case in a recent EvolutionCBS led transaction where FPE Capital acquired Egress, a leading British provider of cloud and data migration and integration services, serving Public and Private Sector organisations.

FPE commented “our investment focus is on assisting high quality businesses scale successfully,” with that future growth delivering the type of returns sought by the fund. The key takeaway for company owners in this is simply, never under-estimate the power of your growth story as a motivator for an acquirer.

In terms of strategy, an acquisition can add new products or services to the acquirer’s existing business. An acquirer could also be motivated by the promise of entering new markets, or a new geographic territory, where the potential return from adding your business and its ‘footprint’ would bring an immediate competitive advantage and deliver enhanced turnover and profits.

Another recent EvolutionCBS deal is a good example: on completion of its acquisition of Specific Environments Limited, Angstrom Technology pointed to both the geographic access to markets throughout Europe and most importantly, the ability to build on the company’s specialised design and engineering capabilities.

Interestingly, the acquisition of Twitter highlights the one motivator that is often overlooked by sellers, which is ‘passion’. Musk is clearly motivated by a passion for technologies that transform humanity, whether it is electric vehicles, innovative space travel, or Twitter’s platform, enabling ‘free speech’.

Steve Barry, Senior Client Director at EvolutionCBS, comments: “Passion really is that essential ingredient in ensuring a successful company sale. The commitment of the current shareholders – whether exiting in full or staying on for the next stage of the journey – should absolutely be paired with identifying and engaging potential acquirers with the passion and enthusiasm to see your business grow and succeed.”

 

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About EvolutionCBS

EvolutionCBS is a long-established, premium provider of business sale advisory services with an enviable track record of international transactions. We work with the owners of UK businesses in any sector and any region, finding buyers from around the world through highly targeted research and supporting our Clients with dedicated Director-led teams, at every stage of their journey to a successful sale.

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