Harnessing the economic benefits of scale in South Australia

A greater focus on growing the “M” in SME will help take the South Australian economy to the next level, says the head of a leading business advisory firm.

“Size matters for South Australia’s economic future,” William Buck Adelaide’s Managing Director Jamie McKeough said.

“Greater consolidation among micro and small-sized local businesses should be encouraged in the coming years for the benefit of the entire state.

“The resulting M&A would unlock greater efficiencies of scale, attract more in-bound investment and promote more sustainable enterprise to drive much needed economic growth in the state.

“Merging more “Ss” together to become “Ms” would also help local businesses reach the critical mass to survive in an increasingly competitive environment. This will allow them to pitch for more work and in doing so, protect and create more jobs.”

Mr McKeough said the State was home to some of the country’s leading micro and small businesses.

“South Australian start-ups continue to punch above their weight on the national and global arena,” he said.

“These micro and small businesses play a critical role in our economic development.

“However we are all in business to grow and it’s in this expansion phase where the larger share of future jobs will be created. Many of the world’s most successful companies began small but got where they are today by thinking big.

“The risk in remaining a very small business is you cannot achieve the scale needed to survive and thrive in an increasingly competitive national and global market.”

Mr McKeough’s comments come as a recent Business SA William Buck survey found that 57% of businesses are targeting growth in the New Year either by organic means or merger and acquisition.

However the opportunities to grow by M&A can be difficult to unearth as only 19% of businesses implementing their succession plan indicated they want to sell to an external party as opposed to intergenerational transfer or management buy outs.

“This is creating a worrying market disconnect for operators seeking to grow by M&A,” he said.

“Faced with this limited opportunity on the open market, we need growth-hungry businesses to be more pro-active and adventurous to bridge the gap.
“However, finding the right strategic business partner or acquisition target and executing the deal is easier said than done.”

Over the years, William Buck’s Corporate Advisory team has assisted many vendors and purchasers with M&A transactions across industry sectors.

As William Buck Adelaide’s Managing Director, Mr McKeough has also successfully steered the firm through several acquisitions in its own right in recent years as part of its sustainable growth strategy.

“An M&A transaction doesn’t happen overnight but instead requires a large amount of planning, due diligence and many conversations over coffee,” he said.

“Understandably, micro and small business operators who haven’t done this before are often unsure how to initiate M&A discussions with potential parties.

“The first step is to draw up a list of potential suitors if you’re a seller, or acquisition targets if you’re a buyer.

“From the outset it’s important to engage with a trusted advisor who can assist by streamlining the process and identifying the best possible options for your business.”

Jamie McKeough can be contacted on jamie.mckeough@williambuck.com