Is a "Unity Agglomeration™" right for your business?
Ok, so, that is a bit of a trick question, as you probably have no idea what a Unity Agglomeration™ is in the first place, so...
Unity means "togetherness" and agglomeration™ is "to form a cluster."
It is a methodology or model created to solve a number of problems entrepreneurs face in growing their business and adding value - shareholder value or what the business is worth at the end of the day - and how and when to exit.
First, it is worth exploring the problems facing small- to medium-sized businesses. Start-up is exhilarating fun and exciting, but if the business is not going to die, it has to evolve into a more "grown up" form of business. And at this point, a lot of the joy gets sucked out for a lot of entrepreneurs. They often fail at this point, move on to the next shiny new thing, or get stuck in a desert of mediocrity for years. These business owners are often award-winning, highly-talented leaders in their field, so why do they get stuck? How do they break out of the desert? What are the challenges that hold these businesses back?
These are the issues small- and medium-sized businesses face:
Mergers & Acquisitions, Public Listings, and IPOs
People who have followed my blogs or been to The Harbour Club know my one-size-fits-all solution to pretty much any of the world’s problems is Mergers & Acquisitions (M&A), and, in fact, most of the problems listed above can be fixed by merging companies together and then publicly listing the new group. But, let’s just look at some of the issues with mass mergers or “roll ups” (as they are sometimes called).
Publicly listing your company gives you the liquidity in shares and reason for the mergers. After all, why would people join a merger unless there was some visible future way out? However, there are a few things to consider when deciding if an IPO (Initial Public Offering) is the way to go.
First, they can be very expensive and time consuming. You pretty much need a board to run the business and a board to run the IPO. Some are also an “exit in disguise,” with all the talent is leaving or certainly planning to.
Some IPOs are just desperate for cash, and, in my experience, most businesses raising money are just trying to fill a leaking bucket with more water. I don’t think IPOs are a good way to raise growth capital. And, most IPOs forget we are a global economy and just list in their country of origin. Why not take a global view of where best to IPO?
The Unity Agglomeration™ solves the issues discussed so far, simply, and elegantly.
So this was quite a list of challenges I found myself working through. The solution I arrived at was the Unity Agglomeration™. I have done mergers, reverse takeovers (RTOs), and roll ups, and this takes the best from each scenario and makes it work for investors and entrepreneurs alike. The best way to look at this is rather like a cooperative IPO, where a group of companies from the same (ideally fragmented) industry join forces and publicly list; then, they grow further by acquiring more companies in the same space.
Let's quickly compare an IPO to a
Unity Agglomeration™, and you'll see how the Unity Agglomeration™ is different.
IPO: Very expensive and time consuming, you pretty much need a board to run the business and a board to run the IPO.
IPO: You ideally need specialist non-executives and anexperienced board to attract investors. Public company investors are a different breed to business angels and PE/VC guys.
IPO: Some IPOs are exits in disguise so all the talent is leaving or certainly plans to, so this can give them a bad rap.
IPO: Some IPOs are just desperate for cash, and in my experience most businesses raising money are just trying to fill a leaking bucket with more water so if you want money for ‘google ad words’ or the such like, its going to be hard/a disaster. I don’t think IPOs are a good way to raise growth capital.
IPO: Most IPOs are pushing hard for the highest valuation because (as I said above) it is either an exit in disguise or they want to raise money (to minimize dilution).
IPO: Most IPOs forget we are a global economy, and just list in their origin country. Why not take a global view of where best to IPO?
UAG: The holding company can be separately capitalized and managed for this process. Unity Group provides all of these services in a one stop shop.
UAG: These positionsare appointed in the parent company and incentivized with shares.
UAG: With a Unity Agglomeration™, there is a clear path for growth through acquisition and a fully-vested management team.
UAG: A Unity Agglomeration™ is a group of profitable, debt-free companies that basically don’t need the money. They are listing for all of the other benefits mentioned, not the least of which are scale and liquidity. This really puts us in the top 1% of IPOs (or more rare in small capital IPOs).
UAG: As we are not exiting or raising money we can list with a very fair valuation and let the market find the right price, this leads to a stable long term growth stock, not the roller coaster penny stock.
UAG: Due to the global nature of our members, we can pick the best markets and countries to arbitrage almost the whole IPO process, so we don’t end up on small, illiquid, secondary markets where the share price slowly dies.
So as you can see, a Unity Agglomeration™ is not a traditional merger roll up, and it is not a traditional IPO. But, if you are doing more than $1 million in revenue, are profitable, debt-free, a leader in your field, and you operate in an industry where you feel there are lots of similar or synergistic businesses that could benefit from collaboratively coming together to create a major player, then quite possibly yes, a Unity Agglomeration™ might be for you.
Apart from solving all the issues mentioned above, why would a competitor come and join you? Well, they are likely to get a much better valuation via this model than a straight sale, and they don’t have to sell out, so it really is a “have your cake and eat it too strategy.”
It works in any country or jurisdiction (just think of all the public companies you know that have operations pretty much everywhere)
Nothing fundamentally changes day to day.
It really is business-as-usual, and they get the tools and backing to consolidate their own competitors (if that is something they have ever wanted to do).
Business is more fun when you are playing with friends; never underestimate the power of the group of founders.
They are “the board you couldn’t afford,” there when you need them, but without any control over your business.
This model drives the bankers and finance guys crazy, because is democratizes the IPO and gives the power to the founders. When the power is with the founders, the advisors are out of job.
This was created by entrepreneurs for entrepreneurs, to fulfill their potential, take back their lives, and drive their own destiny.