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Reflections on the lessons from our recent evaluation of the Acquiring Business 4 Good programme

In one of my first discussions about the programme someone described Acquiring Business 4 Good (AB4G) as ‘more bleeding edge than cutting edge’. That was it, I was sold; dead keen to work with Social Firms Scotland to take a look underneath the bonnet of AB4G to see what makes it tick and where it might go from here.

In setting out, my experience told me that it was always going to be huge challenge for Social Firms Scotland. The entrepreneurial culture within the third sector is still developing and there can be an underlying resistance to adopting even the best strategies and business models from the private sector. In order to build a corporate acquisition market in the third sector, AB4G was going to have to both educate the sector as well as support it.

What I found was that since its launch in 2009, AB4G has steadily gathered pace, interest, and profile. It has been roundly welcomed by third sector purchasers, business sellers, professional advisors, and support bodies alike.

Despite the incredibly challenging economic climate, three acquisitions have now gone through and many more deals are in the pipeline. Most importantly, even where deals have not yet been concluded, AB4G has helped to open up a new route to growth for many third sector organisations, introduced new commercial insights, and put in place the knowledge and networks needed to take on an already established business.

For me, the effectiveness of AB4G seems to stem both from people and process in roughly equal measure. First, the determination, credibility and experience of Social Firms Scotland staff, particularly Karen who leads AB4G, and the pool of professional advisors that sit behind and support the programme. Second, the structured AB4G acquisition process, which reduces the complexity of business acquisition down into a number of manageable and guided steps.

Now more than two years into the programme, Social Firms Scotland has accumulated much learning about business acquisition by the third sector; what it takes to support successful acquisition activity, and the conditions that need to be in place for this to occur.

  • The right conditions
  • A profitable target business
  • Organisational scale and capacity
  • A position of financial strength
  • The right blend of commercial experience
  • An opportunity area or sector
  • Strategic alignment with social mission
  • Adequate industry knowledge
  • Shared values and co-operation with the business owner

It’s probably still too early to conclude with certainty whether AB4G, at its current scale, can stimulate and support a large volume of acquisition activity by the third sector. There is still a steep learning curve for the sector and those that support it before business acquisition will be routinely considered as an option for growth. That said, AB4G has developed the knowledge and tools to support acquisition activity where potential exists.

As for the future, there are a number of big challenges if AB4G is to substantially increase deal flow and impact.

  • Moving to scale
  • A sharper focus and targeting
  • Raising awareness and educating the market
  • Further refinement of the support process
  • Unlocking the capital for business acquisition
  • Embedding the approach into wider support programmes
  • Securing adequate resources to ensure impact
  • Taking the approach to other parts of the UK

To find out more about the progress, impact and learning arising from the Acquiring Business 4 Good programme read the full report from the Social Value Lab here.

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