The Adviser Issue 5 | Page 55

INVESTMENTS to be earnings accretive . Over recent years , this has provided many highly rated companies with a means to increase their earnings-per-share through acquisition , with the retention of an above-average P / E multiple to push the share price upwards . Indeed , for many , an acquisitive strategy was the only way to justify their valuation given that like-for-like organic growth was less inspiring . Institutional shareholders of these expensive growth companies had powerful fund inflows as a result of strong performance to create a virtuous circle . Management is judged on , and their incentive package often aligned to , maintaining growth rates . As businesses grow , the size of the businesses acquired must also increase if management are to influence earnings-per-share growth and preserve its bonus package . However , with larger and / or numerous acquisitions , come greater risks , particularly around strategic , organisational and cultural fit across the various business units and locations . Whilst share prices are always a short-term indicator , and the table below does not represent our opinion on any specific acquisition , examples of recent large acquisitions on AIM are outlined below : Halma , listed on the UK Main Market , is one of the UK ’ s preeminent buy-and-build businesses . Although it too has suffered share price falls in the recent downturn , it has grown into a £ 8 billion company . Over the years , it has made a number of successful acquisitions across many interest rate cycles and investment environments . This is what the co-founder of Halma , David Barber , had to say on acquisitions : “ If you buy a business which is a replica of one you already own and manage successfully , then you are in a good position to check whether or not you have a good deal … Where we do move into a newish field , we do so very cautiously and , wherever we can , we will buy small so as to reduce the scale of the risk .” The AIM market is a vibrant market that nurtures small businesses . Many successful small companies have made effective use of the AIM market to deliver true organic growth whilst enhancing shareholder returns through small quality acquisitions , and we outline some recent examples below : At Puma , the AIM IHT Model Portfolio currently holds 33 companies delivering on a broad range of strategies in a range of sectors to diversify our client investor risk . Some of our holdings are acquisitive periodically . As interest rates rise , company management will need to be disciplined in its search for returns and how that is achieved .

ASOS * £ 1.4bn Topshop 01 / 02 / 2021 £ 265m £ 44.74 £ 14.04 Boohoo £ 1.0bn prettylittlething 28 / 05 / 2020 £ 269.8m £ 3.35 £ 0.82 GB Group £ 1.4bn Acuant 18 / 11 / 2021 £ 547m £ 8.83 £ 5.41

Learning Technologies

£ 1.0bn GP Strategies 15 / 07 / 2021 £ 284m £ 1.98 £ 1.24

RWS Holdings £ 1.7bn SDL 27 / 08 / 2020 £ 854m £ 7.41 £ 4.43

* ASOS moved from AIM to the Main Market on 22 February 2022 Source : London Stock Exchange

Beeks Financial Cloud

£ 106m Velocimetrics 15 / 04 / 2020 £ 4.55m £ 0.90 £ 1.62

Inspiration Healthcare

Property Franchise Group

£ 66m SLE 19 / 06 / 2020 £ 18m £ 0.66 £ 0.97

£ 98m Hunters 19 / 03 / 2021 £ 25.2m £ 1.80 £ 3.07

Tracsis £ 297m iBlocks 11 / 03 / 2020 £ 25.7m £ 6.80 £ 10.05

Source : London Stock Exchange

Get in touch With a wide range of investing opportunities available , please get in touch with our Business Development team to find out how our solutions could help your clients , on 020 7408 4070 or advisersupport @ pumainvestments . co . uk

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