We originally created the Millbourn Ross Cohort Matrix to help us identify firms appetite for M&A alongside the impact of the Coronavirus pandemic.
The emergence of distinct cohorts can be categorised by their attitude to a growth strategy and M&A, alongside the financial, regulatory and operational pressures that have developed as a result of the economic climate.
Cohort characteristics include;
The Impacted
- Revenue Change: Reduced fee income of up to 30%
- Finances: Downward pressure on cashflow/finances - this is likely to play out more significantly into 2021 when government support ceases and the true impact of Covid surfaces.
- Succession: Challenges to hire and retain talent presents longer-term succession planning challenges.
- Technology: Pace of technological change becomes costly to maintain in order to compete.
The Reformers
- Revenue Change: Experienced a low or modest up to 15% impact on fee income
- Growth: Maintain aspirations to grow to retain or gain competitive edge and access economies of scale.
- Funding: self-funded or financed with banking partners, so tendency to adopt a Team or bolt-on approach.
The Ambitious
- Growth: Significant growth agenda - desire to grow revenues by multiples of 2, 3 or 4 and ultimately grow the bottom line.
- Funding: Private equity backed or significantly funded via banking partners
- UK Opportunities: Real desire to acquire firms in the £2m to £15m revenue range across UK. Maybe merger of equals?
The Established
- Revenue Change: Limited impact on revenues from Covid.
- Growth: The largest firms find it difficult to move he needle on revenue with organic or lateral hire startegy, yet very disruptive to explore large-scale merger.
- Outcome: Business as usual.
The Specialists
- Revenue Change: Limited impact on revenues from Covid.
- Growth: Pursuing an organic strategy.
- Status: Leader in area of specialisation or boutique firm.
To full report explores more detail around key findings, pinch points, priorities for growth and key considerations. You can download the full 9-page report below.
