Frank Vettese on M&A for private companies: Making the best happen

As a strategy for success in Canada's mid-market economy, mergers & acquisitions (M&A) is gaining ground, with the focus evolving from extracting value to creating it. When done right, M&A can lead to stronger, more competitive organizations. Frank Vettese, a senior leader in Deloitte's Financial advisory practice, points out that a well-thought out and meticulously executed M&A strategy can help a private company enter the big leagues – and contribute to overcoming Canada's productivity challenge

Private company M&A success story: CBI Health Group

CBI Health Group, one of the winners of the annual Canada's Best Managed Companies program, is a terrific case in point. CBI is a privately owned healthcare company that provides outpatient rehabilitation and complementary services, such as eldercare and home health care, and is overall the largest provider of integrated community healthcare services nationwide. CBI first won Canada's Best Managed Companies award in 2007 and over the next five years, its balanced approach to adding value resulted in the company meeting the defined growth criteria. In 2011, CBI delivered 50% higher acquired earnings than the previous year. "CBI's strategy is to grow equally organically and through acquisitions. What's unique is the management team's discipline in identifying the right targets, applying excellent due diligence processes, and then executing on the integration to grow profitably and create value," says Vettese. "At CBI, they don't just fire a cannon and hope for the best. They make the best happen."

Profitable growth is key to sustainability for private companies

For private companies, growth is a critical – but growing profitably is the key to sustainable success. "When a company succeeds in profitable integration early in the process, like CBI, they create a foundation to build on. They can introduce complementary service lines; they can leverage core competencies like efficient accreditation processes and performance management systems; and they can expand into new geographies. They have the resources to innovate," adds Vettese. The result is increased value not only for the company's stakeholders, but to customers, the community – and the broader economy. The enhanced scrutiny on the delivery of health care services in Canada makes CBI's value particularly relevant.

In recent years, the term "M&A" has evoked the hollowing out of Canadian companies, with foreign investors and companies seeking to benefit from our relatively positive economic landscape. However, companies like CBI have clearly demonstrated how to leverage M&A as a means of creating value and increasing competitiveness.