With backgrounds in developing, buying and selling engineering firms, Rob Whorrod and Clive Stanley moved into the  M&A advisory sector in 2021. Their firm, Acqius, offers a full range of sell-side and buy-side advisory services including exit strategy planning, business preparation for sale, global acquirer/vendor search, negotiation and management of legal contracts and professional services.

What did you do before founding Acqius?

Clive Stanley: I began my working life selling and designing printed circuit boards, for the likes of the aerospace and military sectors. After that, I went into mechanical engineering, working with firms including Lockheed Martin, before joining an explosion-proof CCTV manufacturer called Video Marine International. It was there that I met Rob.

Rob Whorrod: I was a chartered accountant by trade working for PwC, but then took on the family business, which manufactured hazardous-area electromechanical equipment. I ended up running the entire company and eventually sold to a large German operation in 2009. In 2011, I acquired Video Marine International.

Clive and I decided to work together on building Video Marine into a wider protection-equipment manufacturer, Oxalis Group, which we sold to the power-management corporation Eaton in 2015. Our return on investment was impressive.

We also created a lighting range for hazardous areas, Lumenox, and sold that in 2019.

Out of the blue, the leaders of another firm in the hazard-protection sector, Index Enclosures, asked us to sell their company for them. They’d been struggling to sell it for years. But we got in there, created an effective sales and marketing process, and sold the firm really quickly at a strong valuation.

Clive and I realised we had good noses for finding the value in businesses, because we were owner/manages ourselves. The M&A specialists who’d help sell our previous businesses were pretty useless and too many advisories and brokers employ young juniors with little insight or experience to work with firms. We thought There’s a bit of a niche here and decided to move into M&A properly.

What are your day-to-day roles at Acqius? 

Rob: We are both simply called directors. Clive is particularly good at meeting people, so focuses on client capture. I do more of the analytical side of things, such as ways to present a firm to get maximum sale returns.

Clive: We also both run a firm specialising in the development and certification of electrical products that are safe to use in flammable environments, called Ex Dynamics Ltd.

But in the last few months, we’ve decided to put more focus on M&A, created Acqius as a standalone business and put a lot more time into it. We’re new kids on the block, but we recently sold wireless-solutions firm Extronics to the major German corporate BARTEC, and exceeded the shareholders expectations. We have multiple sales currently in progress and several other clients in the pipeline.

What have been the greatest challenges in establishing yourselves in the M&A sector? 

Clive:  Finding clients who want to sell and are in a position to do so is a long process. When private-equity groups own a company, they often have their favourite M&A brokers they like to work with, even though they may acknowledge we have the industry insight to do an excellent job.

But we have 28 live inquiries at the moment, which is a fantastic amount for a small firm, particularly as we don’t want to grow so big we can’t provide a personal, hands-on approach.

Rob: It can be challenging to help owners to understand the true value of their business.

We’ve developed some detailed questions and processes that enable us to drill down right into the depths of a business quite quickly.

After that, we focus on the sometimes-hard task of coordinating the other professionals involved in a sale, such as accountants and lawyers, to keep them up to our speed. Historically, they’ve taken months to complete deals, when it could be done in weeks or even days. That costs company owners and shareholders thousands of pounds they shouldn’t have to spend.

For most acquisitions, 99% of the actual purchase agreement is the same. There’s no need to start everything from scratch or have lots of meetings, as lawyers and accountants often tell companies they need to do.

Does your faster approach ever get pushback from clients?

Rob: We are definitely disruptors in the sector. A recent client did question our process – until we sold their firm. Then they said, “What you did was fabulous.”

What do you think of the current state of the M&A sector overall?   

Rob:  There is a big trend for owners selling companies to their staff. But I don’t think it can work, long term. The employees get the money for the purchase through a loan, but that saddles the business with debt. These employees have then got to sort that out, just when their founders and leaders have left. The sellers tend to get lower values for the sale too. I’m seeing lots of people realizing Actually, no, we need to go back to selling through normal routes.

Clive: There was an engineering business, recently, that had a factory full of bought-outright kit. They refinanced lots of it to pay for a company sale to the employees. That firm is now saddled with that debt. It doesn’t make sense.

Rob: There’s obviously been a lull in M&A the last couple of years due to high interest rates. But we are now seeing a swing in sentiment. People are ready to invest again. We’ve noticed that particularly in the last couple of months.

However, I think some of the huge valuations for companies, particularly in the tech sector, in recent years, will soon become a thing of the past. Too many are based on how much money an unprofitable company might make in the future, rather than how much they are making now. I think it’s a spillover from the dot-com boom. We’ve always believed that if you’re not generating any cash, you’re not a great purchase.

Clive: There’s still a bit of speculative overvaluing about, with companies involved in things like AI and apps. I have seen some tech firms where you think, yeah, that’s got real legs. But I’ve been to angel-investor forums where they are getting excited about too many tech ideas that won’t work financially, just because they sound inventive and exciting.

In your experience, what’s the most important thing SME and other business owners should consider when selling their firm?

Rob: Be really precise and detailed in the way you present your profits. If you had an annual profit of £100,000, but it was affected by events that won’t happen again, like a freak flood at your factory that cost £10,000 to clean up, it’s sensible to tell buyers your profit was £110,000.

Clive: SME owners can be reluctant to do this, but there’s nothing wrong in giving a realistic assessment of what you’ve created. If you made a mistake that affected income, be honest with the buyer, saying “We had a bit of a balls up there, but we learned from it, and it won’t happen again.”

What is the thing that buyers don’t do that they should do?

Clive: I’ve got one word answer for that: integration. All too often, companies buy a business but haven’t planned properly what to do with it. They fail to retain key staff. They try to squeeze the new firm into their ways of working and things go wrong. They ask their existing sales staff to suddenly sell a load of new products, meet resistance and sales drop.

What should firms be aware of when choosing an M&A advisor?

Clive: Some fairly significant players’ business model is to sign up an owner, charge a monthly retainer, and then provide a very poor, drawn-out service. I know of one man who was told his business was worth one million pounds, he paid £6,000 per month to the advisor, and they got one offer a £40,000 for his firm.

We just take a small upfront fee, and if we don’t sell the business, we don’t get any more money. It doesn’t benefit us to have a company sitting around for 18 months.

When we sold one of our businesses, we met with an advisor who claimed to know all about our sector. But when we quizzed him, he didn’t even recognize one of the basic terms used. So be wary of firms claiming they know about things they don’t. Don’t go with a firm just because they’ve sold a lot of businesses in a year. If they took on 200 but sold 20, that hit rate is terrible. And how much did they sell them for, relative to client expectations?

You’ve worked with lots of entrepreneurs and set up and sold several businesses yourselves. What lessons have you learned about running a company?

Rob: Only through failures, do you become successful, in the end. They peg out the boundaries that you don’t cross ever again.

A fast buck is impossible. You have to build brick by brick, to be disciplined enough to be able to say, “Right, I’ve put that one brick down, and even though I haven’t earned any money yet, I’m going to do the next one.” After all, if you try and build a house in one day, you fail, don’t you?