Whether it is to acquire or be acquired, companies ranging from start-ups to well established businesses will understand the importance of the term acquisition and the potential that it brings.
However, not all understand how to make themselves an attractive acquisition target despite there being ‘a buyer for everything’. On a recent SBC-hosted webinar, acquisition was the talking point for some speakers from the sports betting affiliate sector – a segment of the global sports business industry which is no stranger to regular takeovers and mergers.
James Garmston, Founder & CEO of DunkMedia Ltd, was tasked with exploring this topic and squeezing the guidance out of the three CEO’s, as he moderated SBC’s latest webinar.
Setting a target to be acquired is the first step in achieving this dream, but without solid foundations a business is unacquirable. Panel member Scott Longley, CEO of Clear Concise Media, stressed just how essential having foundations in place is to attract acquisition interest.
“You have to be earning something in terms of revenues and profits,” he emphasised, noting that if this isn’t being achieved, the chances of acquisition become increasingly slim.
Consistency is another foundation that must be present in a company that is looking to be acquired. Christopher Russell, CEO at OneTwenty Group, has been on both sides of acquisition deals and emphasised how important consistency is when attracting a scale-up company.
“If you’re a startup in the £0-3m range, your first exit may be due to quarter on quarter and year on year revenue growth. As the CEO, EBIT and cash flow are going to be your three main components when showing consistent growth. At that stage of your journey this is going to be core to if you sell your business not.
“If a scale up comes in and wants to buy you for around £10-12m and you’ve got an up and down growth, it probably won’t. So it’s about consistently building one quarter on top of the next as you get a bit bigger.”
The success of a sports affiliate can drive acquisition interest in other ways. Carlos Sanchez, CEO at TipsterChat, observed that in some cases a buyer can’t understand how to replicate a business or assess that it would cost too much to do so, and so instead they buy it.
The panel also discussed regulatory developments, a huge talking point at the moment in sports betting. This is particularly the case in latin America after as Brazil President Luiz Inácio ‘Lula’ da Silva signed a Bill which will establish the regulatory framework for the country to launch its federal sports betting marketplace.
Longley warned that regulatory conditions are one factor that isn’t controllable for a company when aiming to be acquired, using the recent acquisition of Playmaker Capital as an example.
Arguably one of the biggest M&A moves in the sports affiliate space last year, the acquisition saw LatinAmerica-focused Playmaker and its football content sites integrated into the wider portfolio of Denmark-based Better Collective – the timing of which just a few months prior to Brazil regulation couldn’t have been better for either party.
Ultimately, however, as Longley observed, regulatory factors are out of all sports stakeholders control. He explained: “They (Playmaker) probably didn’t consider it ahead of time, but they were in a pre-regulatory market, and now that audience looks exceptionally attractive to operators who may or may not be interested in Brazil.”
Ultimately, the speakers observed that there are a host of factors for sports affiliates to consider when making themselves an acquisition target. This ranges from having the right network to ensuring you have a strong foundation, but can also depend on the simple factor of being in the right place, at the right time.
To hear more insights from SBC’s Affiliate Day, covering several other crucial topics, follow the link HERE