For some founders, after building up and establishing their businesses, they prefer to rest or start again with a new venture.
In other words, these entrepreneurs will seek exit strategies. This could be done with an initial public offering (IPO), private equity buyouts, and selling your stakes.
More commonly, though, entrepreneurs would go the acquisition route. This means that a company buys over another company. For example, Farm Fresh’s majority stake acquisition of Inside Scoop, StorHub’s majority stake acquisition of Flexi Storage, and iPrice’s acquisition of Bukalapak.
But there are some companies like Singapore’s Una Brands that focus on acquiring ecommerce brands to turn them into household names. Since its launch, the company has over 20 acquisitions, including two Malaysian brands.
If you’re looking to be acquired by them, or other companies like them, well you’re in luck. During one of Startup Week Malaysia 2023’s events, we had the opportunity to hear from Carey Su, Malaysia’s country head for Una Brands.
There, he shared with us five factors the company looks at when acquiring new names in their portfolio:
1. You need to actually be profitable
As with any talk between businesses, numbers play an important role in whether a deal is made. So it shouldn’t be surprising that financials is one aspect Una Brands looks at.
But more specifically, Carey explained that the company scrutinises a brand’s profitability. Typically, the company prefers brands with a gross profit of at least 50%.
This is because if a brand makes less than that, “It’s very hard to spend on marketing and still make a profit after.”
On a larger scale for Una Brands’ portfolio, this would refer to brands that have a top line of at least US$2 million.
Dictionary time: Top line refers to gross figures reported by a company, such as sales or revenue.
Investopedia
2. You have a good reason to exist
It’s no secret that with more brands popping up these days, standing out can be challenging. Which is why Una Brands places a strong emphasis on its acquired brands to have good unique selling propositions (USP).
Speaking frankly, Carey stated, “We think your product and your brand needs a good reason to exist.”
This doesn’t mean it should just be a slightly better product than what’s out there. Instead, Una Brands is looking to acquire brands that go all out. These are the ones that own their particular niche and happen to be (or have the potential of being) one of the top offerings in that market.
Take Supermama Lab, a Malaysian baby care brand that Una Brands acquired, for example. As a company mainly selling breast pumps, Supermama Lab sets itself apart by being a feasible mid-tier option. Meaning that they’re not as expensive as bigger brands, but not cheap like OEM products either.
3. Your product line is not limited to one best-selling item
That said, Carey clarified that Una Brands isn’t looking for companies with just one best-selling item. It’s actually quite the opposite.
To help companies grow further, Una Brands also focuses on acquiring those that have the potential to expand their current product line. Not merely to attract new customers, but to cater to the needs of their existing customer base.
Basically, as Carey put it, “What else can you offer them (the existing customer base) that they would want?”
In Supermama Lab’s case, aside from portable breast pumps, the brand has expanded its offerings to include baby bottle warmers, UV sterilisers for baby bottles, and even lactation supplements. By doing so, the brand increases its value to existing customers.
4. Your products are marketable in more than one way
At Una Brands, Carey shared that they prefer to keep the ideation of marketing strategies in-house.
One of their more common strategies is to have different pipes of messages around. This way, they’re able to better determine what appeals to each customer segment.
Narrowing it down further, they’ll create different personas to target customers who are at different stages of the marketing funnel.
Hence, the brand and its products need to be marketable in various ways. Otherwise, it will be challenging to come up with various creative angles and formats for marketing.
5. Your sales channels can be expanded
This might seem like a no-brainer considering that Una Brands’ mission is to help companies grow. And in today’s fast-paced commerce landscape, it’s tough to grow if you’re on a single sales channel.
So Una Brands focuses on brands that have the capabilities of investing in more sales channels.
This also includes the ability to hire and train more people to handle these additional sales channels on a larger scale.
To elaborate, growing a business means gaining more customers. But by doing so, you’ll first need to ensure that the brand can cope with the influx of product demand.
-//-
Aside from these aspects, you should also pay mind to other factors that could affect your chances of a successful acquisition.
According to Entrepreneur, this includes:
- Getting all housekeeping matters in check, such as sorting through your company’s financial history and reports
- Getting insights from industry experts, like investment bankers, attorneys, and tax advisors
- Informing key stakeholders and major partners so that they’re aware of what’s going on
But generally, before doing anything drastic, it’s best to ensure that you understand why you’re seeking an acquisition and what you and the company are able to gain from it.
Featured Image Credit: Una Brands
