Growth through Acquisition: Insights from Carbon Group’s Co-founder, Jamie Davison

In the dynamic world of business, growth strategies play a defining role in achieving long-term success. A model student of this philosophy, Carbon Group is an innovative accounting and business services firm that regularly gains attention each time they strategically acquire another accounting firm.

Angela Melotti had the opportunity to sit down with Jamie Davison, Co-founder of Carbon Group, who kindly offered to tell a bit of his story and share some of what Kev Ryan calls the “cuts and bruises” of transacting accounting firms.

Let’s delve into Jamie’s thoughts on Carbon Group’s journey.

Can you describe the motivations behind Carbon Group’s decision to acquire other businesses? What specific goals or advantages were you seeking to achieve through these acquisition/s?

Carbon has a unique ownership model with a 50/50 split of ownership between Carbon Global and local practitioners, allowing each firm to operate on a local level in the communities they operate in.

As a national business, we invest in systems, technology and group resources so that our practitioners can focus on servicing their clients whilst also passing on economies of scale.

Carbon’s decision to acquire other businesses stems from our desire to scale in each of our seventeen – and growing – operating locations.

Ultimately, an acquisition allows us to combine the organic growth of each local firm with a broader strategic referral funnel that encompasses financial planning, finance and general insurance. In this way, each firm can benefit from the scale and back-end support that smaller firms struggle to replicate.

How does Carbon Group identify the businesses that you eventually acquire? What criteria or factors do you consider when selecting a suitable firm for acquisition?

In our 30-plus acquisitions, we have prioritised ‘cultural fit’ and sought compatibility between our Group and the partners running the firm or those who will step up into running the firm.

As well as a good cultural fit, we seek partners with a growth mindset, aiming to grow exponentially over the next five to ten years.

We also tend to focus on acquiring firms in major cities or those that can be relocated to existing offices, creating economies of scale and driving costs down further – a win-win for our new partners.

For Carbon, the process of identifying the right firm is made easier through our relationship with the right network of people, particularly Transaction Advisors.

When acquiring businesses, what difference has it made when a vendor has been professionally represented?

We often see that accountants have not thought about succession planning for their own businesses and professional representation will help bridge that gap. With professional guidance, the heavy lifting is taken care of for the vendor and the firm is brought to the market at the right time.

Good professional representation comes in the form of a quality Transaction Advisor - someone that works with a vendor over several years and helps them bring the business to the market when they are ready to sell and has the right connections to help them find a win-win outcome.

For us as the buyer, we know that a professionally represented firm is at the right stage of the process hence our decision to work with Kev Ryan.

Please describe Kev Ryan’s involvement in Carbon Group’s various acquisitions and mergers.

We have worked with Kev for over five years now. Early in our relationship, he spent the time to get to know us and find out exactly what we were looking to achieve now and in the future. So, if you see a call on your mobile from Kev you know it’s a call worth answering as he only presents opportunities that fit our exact criteria and culture – rather than us chat with 20 different potential firms that aren’t ready to sell.

What’s great is that Kev knows what information we need and will always have all that information ready to go. This saves us a lot of time and gives us a huge head start on the acquisition process.

He also looks for genuine win-win opportunities so that everyone will benefit from the transaction. It is much easier to do a deal when there is something in it for everyone.

What are some of the challenges that you encounter when acquiring our businesses and how do you overcome them?

One of the primary challenges to any acquisition is when potential sellers are not truly ready to sell, despite initial indications.

To prevent this, a quality Transaction Advisor will spend considerable time upfront speaking with the vendors and asking the right questions. This due diligence helps us avoid investing time and resources into deals that may never materialise.

Kev’s expertise and understanding of our objectives have been invaluable in navigating negotiations and finding win-win solutions that benefit all parties involved time and time again.

What are some unexpected or surprising aspects that may arise during the acquisition process?

Every transaction comes with its unique aspects, and unexpected circumstances are not uncommon. That said, having a Transaction Advisor, like Kev, involved always proves valuable when it comes to understanding the underlying issues and emotions that may arise during negotiations.

His ability to listen and find solutions that address the concerns of everyone involved has facilitated smoother transactions. In our case, Kev streamlines the process, ensuring that we focus on opportunities that align with our goals and minimise wasted time.

Looking forward, does Carbon Group have plans for future acquisitions?

Absolutely, we are aiming at over 30% Year on Year growth for the foreseeable future and further acquisitions and partnerships will help us achieve this goal. We will continue to evaluate opportunities based on cultural fit and ensure they will look after our clients.

What advice would you give to those looking to sell their own business? And, to other businesses looking to acquire other businesses?

For vendors, the best place to start would be to get professional representation that you can trust. You want someone who will guide you through the entire process and make introductions to the right people at the right time. This improves the likelihood of what Kev states as being sustainable outcomes.

For those looking to acquire other businesses, I would point out that business acquisition is harder than you think the first few times – it requires a lot of dedicated involvement. Like my advice to vendors, having a relationship with an expert will save you time and result in a better outcome.

Clearly, Carbon Group’s journey is the perfect example of the strategic advantages of acquiring other businesses to achieve growth. With the supportive expertise of their Transaction Advisor, Kev Ryan, who continuously helps facilitate effective integration strategies, Carbon Group has established itself as a leader in the accounting and business services industry. Their success serves as inspiration for other businesses considering acquisition as a means of expansion.

Looking to undertake your own acquisition or develop your own succession plan for your business?

Reach out to Kev Ryan on 1300 48 11 52


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