The Cogent idea: "One plus One equals Four"
Successful acquisitions leverage synergies. We created our logo to represent the concept “One plus one equals four” to graphically describe Cogent Growth Partner’s core principal; the value of a truly successful acquisition is greater than the sum of its parts.
Throughout the entire acquisition process, but particularly in the initial phases, we explore potential synergies, consolidation opportunity, HR overlap, cross-selling potential, compare and analyze product lines, costs of service delivery, and overall economies of scale. All to discover the inherent “opportunity.” We believe that once the opportunity is revealed, or not, it is much easier to understand how to price the transaction and for all sides to acknowledge the veracity of the offer.
The result is most often realized margins that are higher than either the acquired or acquiring company could achieve independently. This is accomplished by shedding overlapping expenses, identifying and realizing economies of scale, and supporting the combined revenue with newly balanced service delivery capacity (with perhaps a “productivity” kicker). For these and other reasons, an accretive acquisition strategy not only increases top line revenue, but it should enhance gross margin performance and create more free cash flow.
There is also a compounding benefit as a result of the increased net cash generation -- a corresponding increase in the enterprise value of the combined company – often by a significant multiplier. Even after factoring in acquisition costs.