Two bolt-on acquisitions announced this week show a growth route many established owners never try: buying a competitor or a business in the same field. One buyer has now done it 17 times. The other agreed a £3 million price set at five times the target's profit.
01What happened
On 1 October, IT and communications firm Flotek Group said it had bought Comvista Networks, a network infrastructure specialist based in Glenrothes, Fife. Flotek described it as its 17th acquisition. The terms were not disclosed.
On 5 October, Business Sale Report said financial services group TEAM plc had exchanged contracts to buy Hedley & Co, a Lancashire wealth manager and stockbroker. The price is £3 million, paid in cash and new TEAM shares.
According to the report, that price is five times Hedley & Co's pre-tax profit of £600,000 for the year to August 2025. The deal still needs regulatory approval.
02Why a bolt-on acquisition suits an established owner
Both buyers already had a working business. They are using it as the base for the next one.
That changes how a deal like this is funded. A lender looks at the two businesses together, so the buyer's own trading record counts. The existing business can often provide the deposit and some of the security.
A listed group can also pay partly in its own shares. A privately owned small business usually cannot, so it relies on retained profit, a business loan and money left in the deal by the seller.
03What to do if you are thinking of buying
Start with your own figures. A lender will read your business before it reads the target.
Then work out what the combined business can afford to repay, including the cost of joining the two. Our guide to funding a bolt-on acquisition walks through how lenders look at the deal, with a worked illustration.
If you want to test a deal before you make an offer, our business acquisition finance team can look at it with you.
