2. Behind Unity Group
He was recently awarded the Asia Best Employer ‘Outstanding Leadership’ award and he is a Mentor /
Advisor to DBS Business Class amongst others.
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Jeremy Harbour
Unity Group
Jeremy is a Singapore based entrepreneur with a truly
global focus, owning investments in 12 countries and
having bought and sold over 40 companies, and ad-
vised on around 100 more.
He lectures all over the world on the subject of SME
M&A with a focus on distressed and motivated acqui-
sitions, and has coached people from numerous larger
organisations including Moore Stevens, KPMG, Tesco
and Microsoft on how to buy small and medium siz-
ed companies.
Callum Laing
Unity Group
Callum has started, built, bought and sold half a
dozen businesses in a range of industries across
two continents. He is a regular writer and speaker
on topics related to business ownership, creative/
strategic partnerships and other entrepreneurial
bits and pieces.
He is the Director and Asia President of The Mar-
keting Group PLC and he is also a Director of
Entrevo Asia, a company helping executives and
-
ence’ in their industry.
Jeremy is also shareholder and advisory director for The Mint National Bank and recognised as a DBS
Business Class advisor.
He has been Coutts Entrepreneur of the Year runner up 3 times, was on the fundraising committee of
the princes trust, has been invited to Buckingham Palace and the parliament in the UK to advise of
matters of business and enterprise and has been written about in the Sunday Times, Financial Times,
and numerous other publications. He has been featured on the Money Channel, and in 2012 was asked
by Capstone (the largest publisher of business books in Europe and the USA) to write his story, this
book, called Go Do was published shortly after and went to number one on Amazon on three occasions.
As a HNWI himself, Jeremy brings his private banking contacts and resources to the business as well as
his knowledge and track record.
3. Market Composition
Small and medium-sized enterprises (SMEs) make up the bulk of every economy’s
number of enterprises. This shows the importance of these businesses to a nation’s
economy, a nation’s economic success and the providing of jobs. Everyone seems to
focus on the big brands and massive multi-national companies but we believe the
true value to be unlocked lies in the trillions of dollars locked-up in SMEs.
Europe
In Europe, roughly 99% of total enterprises are SMEs. This is characterised as compa-
nies with 250 staff and below. This 99% contributes an average of 53.5% of GDP.
Australia
In Australia, there are roughly 1.2 million SMEs representing about 96% of businesses
and 33% of GDP. There are over 100,000 businesses with an annual turnover between
$2m and $100m accounting for $16 billion or 9% of commonwealth revenue.
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4. Market Composition
Singapore
In Singapore, 99% of the total businesses are SMEs and they contribute around half
of the nation’s GDP.
New Zealand
New Zealand has more than 400,000 SMEs, making 97% of the businesses there. How-
ever, interestingly enough, these SMEs only contribute to about 36.5% of the nation’s
GDP.
In conclusion, from a purely numerical standpoint, more than 90% of companies
globally are SMEs and they only contribute less than half of the GDP. This means that
less than 10% of companies, which constitutes the number of huge MNCs, are making
for a smaller pie even though they constitute a large majority. Thus, it seems that
from a macroeconomic level, to aggregate would indeed present an opportunity to eat
into that very much bigger pie.
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5. The Central Problems
The Agglomeration
Unity means ‘togetherness’ and Agglomeration is ‘to form a cluster’. It is a method-
ology or model created to solve a number of problems entrepreneurs face in growing
their business and adding value. By that we mean shareholder value, or what the busi-
your business valuation. The next question then is now that you have grown your
business, what is the next step? How and when do you exit?
First it is worth exploring the problems facing SMEs. Start-ups are exhilarating fun
and exciting but if the business is not going to die it has to evolve into a more ‘grown
up’ form. At this point, most of the joy gets sucked out for a lot of entrepreneurs. They
often fail at this point, move on to a shiny new thing or get stuck in a desert of me-
diocrity for years. These business owners are often award- winning, highly talented,
What are the challenges that hold these businesses back?
The Scale Paradox
This is well known to most entrepreneurs that you need to be big to get big. Landing
the biggest margin juicy contracts often needs you to be big enough to handle them.
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nant market player picking up the contract and subcontracting it to the specialist to
actually get it done.
There is an old adage in the 1990’s for IT procurement managers, that ‘no one ever
got sacked for choosing IBM’. It basically means that one should stick to the big safe
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plier and not the procurement decision. It is also generally true in procurement best
practice not to issue contracts that represent more than 30% of a companies turn-
over, this often does not get shared with suppliers and they just see their tenders get-
ting knocked back and contracts given to less able competitors. Scale not only affects
growth, but also valuation, big businesses are just worth more than small businesses.
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6. The Central Problems
Succession
Entrepreneurs are often integral to the business and when it comes to an exit they
often get tied up in legal knots to retain them. This often means that they cannot get
their hands on the exit money for years, or create a huge risk by paying them off. As
they leave, and most of the drive and passion leaves with them. People hate change.
So how do you safely transition in future?
Demographics
This is really prevalent in mature economies that have the demographic cliff looming;
United States, Canada, UK/Europe, Japan, Singapore, Australia etc,. In these countries
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cessful.
However, wherein previous generations there was always a wave of new blood
in history the next generation is smaller than the last. The fact that barriers to setting
up a business has dropped to next to nothing further exacerbates the problem. Why
buy a business if you can start one and compete almost instantly? This essentially
themselves without succession, without buyers, too small for the larger players to buy
and too good to simply close down.
Liquidity
In layman terms, this simply means how easy it is to get your money on the table, the
a challenge you necessarily thought was a challenge but it is a huge driver of share-
holder value. Public listed shares often carry a premium for their liquidity. For most
entrepreneurs the exit is a ‘binary’ choice, they sell or they don’t sell. If they take on
an investor, they have to show a strong business case for the use of the money, they
cannot simply go and buy a Porsche.
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7. The Central Problems
Wealth and Value Creation
As a business owner, how do you create the best value and wealth from your business?
Do you sell or do you leave it under management? Many people, had good businesses
that were ‘keepers’ back in 2007/2008 that simply do not exist anymore. The biggest
question is always when do you sell? You do not want to sell too early, what if next
year you get all those contracts that you have been saying you will get next year for
the last 5 years? The biggest issue with wealth creation in business is that only 20% of
business actually create any wealth for their owners (the rest cease to be) and of all of
those they don’t normally achieve much more than a return on capital (sweat equity
in most cases). If you add up the man hours contributed and add a risk adjusted return
on capital that is probably what you have achieved for all the blood sweat and years
you just gave up, it is not just an idea, it is an economic fact (ask an economist). In a
weighted return on capital so the very free market that allows you to start up so easily
also makes it very hard to break out from the momentum of mediocrity.
Global Expansion
Having strong international markets and businesses is a great way to reduce risk and
be hugely expensive, time consuming and risky and distracting.
Portfolio Approach
It is an adage that we should not keep all of our eggs in one basket but entrepreneurs
feel forced to. They have their shares in their business and that is it, for better or
worse. Often this business will be taking the best years of their life. As entrepreneurs,
we are taught to see that it is all or nothing, you either ‘hit it out of the park’ or you
fail and there is no happy medium.
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8. The Central Problems
Access to Capital
Raising money for smaller business is really hard. There is a huge sea of capital wait-
ing to be deployed into businesses but small businesses are just not big enough or
de-risked enough to attract it. 90% of all businesses globally are SMEs. This alludes to
literally trillions of dollars of investment potential that is effectively taken off market
due to scale and transaction costs. When you do get investment, it is not so much of
the strings attached, but rather of ropes and padlocks. You have to sell your soul, your
dream and your control to the investor.
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gether and then publicly listing the new group. For exposition sake however, we shall
look into some of the issues with mass mergers or ‘Roll ups’ as they are sometimes
called as well as the issues with public listing in the following section.
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9. Common Problems with Mass Mergers
Ego/Pride
An intangible but prevalent problem. Entrepreneurs do not want to feel like they sold
out, got bought or gave up. They want to see their efforts rewarded with growth and
success in their own name. Entrepreneurs usually are not inclined to take top-down
Talent Retention
key people, sometimes with the key customers. In SMEs talent is everything, it is of-
ten their only unique selling point. Most SMEs are also one key customer or staff away
from having their worst year ever.
Brand Retention
Many companies are obsessed with acquiring businesses and changing the name
above the door, they want to show off their new acquisition but with all the years of
work and trouble that have been invested, the brand is actually a valuable asset that
should be retained. Also, people hate change, so customers and staff alike are prone
to rebelling at this point.
Management
The problem with management paradoxically, is that it does not work! In fact most
management books in the last 15 years are all about how the modern hierarchical
now want mastery and ownership over what they do, empowerment to do it their way.
If they have built a successful business in that space why would you want to tell them
to do something different? People are too obsessed with control over results. We take
on a contrarian view that often, results come from giving control not taking it.
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10. Common Problems with Mass Mergers
Synergies and Centralisation
This comes off as a bit of an MBA hangover. People believe that the reason to roll up
itself but we have gone full circle on this born out of hard won experience and now
believe post-merger, less is more. You can spend a fortune and upset everyone, staff
or whatever plan you are using. Do not forget however, that you actually create a huge
amount of value straight away by creating the scale. So, focus on allowing the busi-
ness to just keep doing what it has always done; Stagnation post-merger should be
viewed as a raging success! The challenge that always seem to present itself, is how
then do you motivate synergies later and the Unity Agglomeration solves that.
How are the Acquisitions Paid For?
Most roll ups are either debt funded or investor funded. Either route creates a huge
stress on the eventual vehicle. Other examples of stress include being pushed by in-
vestors for results and laden with debt they fall over (the leveraged buy-out or LBO).
You can do a straight equity merger but you need to have a compelling plan, a possible
trade sale at some point in the future would not generally cut it.
Previously, we mentioned listing (merge and list), the listing giving you the liquidi-
ty in the shares and reason for the mergers. Why would people join a merger unless
there was some visible future way out? However there are a few things to consider
when looking at an Initial Public Offering (IPO), when you sit your company on the
stock market.
Cost of Listing
Firstly, it is very expensive and time consuming.You will need a board to run the busi-
ness and the IPO. Ideally, you will need specialist non-executives and experienced
board to attract investors. Public company investors are a different breed to business
angels and PE/VC types.
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11. Common Problems with Mass Mergers
Exits in Disguise
Some IPOs are exits in disguise such that all the talent is leaving (or certainly plans
to) and this can give them a bad reputation. Some IPOs are just desperate for cash and
it is from our experience that we say most businesses raising money are just trying to
If you want money for ‘google ad words’ or the like, it is going to be hard or simply a
disaster. We do not think of IPOs is as a good way to raise growth capital. Most IPOs
are pushing hard for the highest valuation because it is either an exit in disguise or
they want to raise money (to minimise dilution).
Most IPOs forget we are a global economy, and simply list in their country of origin.
The question is why not take a global view of where best to IPO?
So that is quite a raft of challenges that Jeremy Harbour, the founder of Unity Group
found himself working through in the past. The solution he then arrived at is the Uni-
ty Agglomeration. He has done mergers, reverse take-overs (RTOs), roll ups and the
Agglomeration takes the best from each scenario and make it work for investors and
entrepreneurs alike.
The best way to look at it is a sort of a cooperative IPO, a group of companies from
the same (ideally fragmented) industry to join forces and publicly list and then grow
further by acquiring more companies in the same space.
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12. The Solution
The Unity Agglomeration solves the issues discussed above, simply and elegantly.
Scale
All of the member companies share a common holding company. They continue to
run their own business in their own way, but with a consolidated Income Statement
and Balance sheet in the parent company. This gives them the scale to point to when
pitching for contracts, as well as the geographical coverage and the product diversi-
and small and dynamic as well. This scale is instant, with The Marketing Group PLC,
we started with a market cap of 14.4m Euros almost overnight, with more than 100m
in additional value slated to join the group in 2016.
Succession
Each business is a silo within the group, so there is limited liability for each business
unit but with publicly listed stock it is easy to go and acquire a similar business to one
of the silo businesses and bring in their management team. This thus creates easy
natural succession without having to sell out and the company joining gets to merge
to make themselves instantly bigger, gets public stock and a better than normal val-
uation (due to the scale and liquidity advantages). We have always believed that the
best route for succession is through merger, as the best people to run a business like
yours are running a business like yours right now! However, the missing piece has
always been the bigger picture for both sides and the public company is that missing
piece.
Demographics
By collecting smaller businesses together you can create bigger players in each of the
players and hundreds of thousands of small talented competitors. By clustering, you
can create a middle tier and a more stable future proof business.
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13. The Solution
Liquidity
The public listing allows people to sell when they want or sell a little and keep the
the same boat fosters cooperation to drive share value and the timing of share exits.
It is in nobody’s interest to dump the stock, so it happens in a more orderly fashion.
Founders have share restrictions for the rest year and also have share bonus linked
to over-performance in subsequent years. To rebalance high performance versus low
performance members, this share bonus also has further lock in periods. These com-
bine to create a stable share price and a natural willingness to cooperate when it
comes to exiting blocks of shares.
Wealth and Value Creation
In this respect we believe we have found the holy grail of entrepreneurship. You can
put your share price on your smartphone screen and literally see your net worth on
a daily basis, your actions have direct correlation; a dollar saved is multiplied in the
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one around the table has that same motivation. We take away the binary sale choice,
and create smooth and steady exit instead. We also have a dividend policy so all com-
panies in the group issue dividends, this means that the founders get income from
their shares so they do not have to sell them to get money in. This is also a powerful
small cap companies are rare beasts indeed!
Global Expansion
It is very simple to add new companies in new territories quickly and simply, giving
every new territory. There are huge opportunities for service overlap, tax planning
and cost of production reduction when you start to utilise different markets in this
way.
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14. The Solution
Portfolio Approach
Sometimes business owners are fearful about getting into bed with strangers. We fo-
cus on making sure they are not too strange but we also remind people that instead of
having $1m worth of shares in their own business (if they sold it all today), they now
have $1.5m of liquid shares (for illustration purposes only) shared across a number of
business. They also get share incentives for over performance and the share price is a
and not to mention, considerably de-risked.
Access to Capital
The Unity Agglomeration is a great way to join the huge amount of capital in the
world with the SME sector. We create vehicles big and interesting enough to attract
the capital and liquid shares so that they can come and go from their investments.
The groups also have access to soft loans from the parent that they decide on the dis-
tribution of, to assist in working capital and growth projects. Also many businesses
would love to buy up their competitors locally or globally, but lack the cash to do so.
With this model, we have our publicly listed stock and Unity’s M&A expertise to help
consolidate the members of particular niche sectors, or even add products or talent
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tions.
Ego/Pride
Under a Unity Agglomeration, the business owner remains 100% in charge of their
business, the brand stays the same and there is no external interference in what they
do. They are publicly listing their business, which is on most entrepreneurs ‘bucket
list’ of things they want to do in their career, so it is them at the centre of a collabora-
tion for a common purpose, and that is a really exciting place to be.
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15. The Solution
Talent Retention
As nothing really changes operationally, there is no boat rocking to scare off the key
people. Furthermore, the founders are in for the ride to keep working and growing so
the most important people are all still around. The ability to reward key people with
shares, now really mean something as they are tradable real shares with real value.
Brand Retention
The pet hate, the ego and belligerent cost-saving driven roll-up where they try and
gets lost in the process!
Under a Unity Agglomeration all the brands are intact and carry on business as usual.
This is so that none of that value is destroyed and you also have a potential portfolio
approach to any brand damage issues in future.
Management
Under this methodology each CEO now sits on an executive board of directors, as well
as running their own company, they are not directed by anyone, they have statutory
duties which are slightly enhanced under the umbrella of a public company but oth-
erwise they have total autonomy and control of their own business. There are basic
safe guards, matters that reserved for group decisions, which are all set out in a group
constitution designed by the founders. The only remit of the executive board is to
open agenda to save a dollar or make a dollar by working together. The majority of
the shares are represented at these meetings so it is in everyone’s mutual interest to
make these work.
We also put in place an equity incentivised Executive Board to comply with the mar-
kets we are listing on. They are market facing and cover the roles of compliance, le-
board is voted for annually by the executive board, so the founders choose this group.
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16. The Solution
Synergies and Centralisation
As already stated there is no synergy drive, just left to nature. The view is that every-
one’s outcomes are perfectly aligned and that less interference is more productivity.
Most of the value has come from the scale and the liquidity. Any synergies henceforth
are the icing on the cake or pure upside.
We believe forced centralisation is the most common mistake in roll ups. There are
a great many examples of centralised sales teams and the like. However, this takes
years to get up to speed, cost huge amounts to deploy and do not leverage the talent
and brands of the group companies. In a Unity Agglomeration, the only touch point
people have with the holding company is as a public investor on the stock market.
Now leading naturally into the points on the IPO and why a Unity Agglomeration is
different:
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IPO UAG
Very expensive and time consuming, you
pretty much need a board to run the busi-
ness and a board to run the IPO.
You ideally need specialist non-executives
and experienced board to attract investors,
public company investors are a different
breed to business angels and PE/VC guys.
Some IPOs are exits in disguise so all the tal-
ent is leaving or certainly plans to, so this
can give them a bad reputation.
Some IPOs are just desperate for cash and
through experience, most businesses raising
with more water. So, if you want money for
‘google ad words’ or the like, it is going to be
hard/a disaster.
The holding company can be separately cap-
italised and managed for this process, The
Unity Group of Companies provide all of
these services in a one stop shop.
These are appointed in the parent company
and incentivised with shares.
With a Unity Agglomeration there is a clear
path for growth through acquisition and a
fully vested management team.
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able debt free companies that basically do
not need the money. They are listing for all
for scale and liquidity. This really puts us in
the top 1% of IPOs or probably even more
rare in small cap IPOs.
17. The Solution
All in all, a Unity Agglomeration is not a roll up, and it is not a traditional IPO, but
to come back to the opening question, is it right for your business? Well, if you are
and you operate in an industry where you feel there are lots of similar or synergistic
player, then quite possibly yes!
Apart from solving all the issues mentioned above, why would a competitor come and
join you?
• They are likely to get a much better valuation via this model than a straight
sale
• They do not have to sell out, so it really is a ‘have your cake and eat it 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
• They get the tools and backing to consolidate their own competitors
• 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.
and gives the power to the founders. Interestingly, when the power is with the found-
ers, the advisors are out of job, This was born by entrepreneurs for entrepreneurs, to
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IPO UAG
Most IPOs are pushing hard for the highest
valuation because it is either an exit in dis-
guise or they want to raise money (and thus
want to minimise dilution).
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?
As we are not exiting or raising money we
can list with a very fair valuation and let the
stable long term growth stock, not the roller
coaster penny stock.
Due to the global nature of our members we
can pick the best markets and countries to
almost arbitrage the whole IPO process so
we do not end up on small illiquid secondary
markets where the share price dies slowly.
18. Joining the Agglomeration
The Agglomeration is a model created by entrepreneurs for entrepreneurs, and seeks
to create more options for business owners. Although we welcome companies to join
us, there is a main criteria that we work with:
Companies need to be profitable with at least USD $350,000 of annual EBIT.
If you feel that the Agglomeration is right for you and your business, you can contact
the Unity Representative that has been in touch with you. Most of you at this point
will be wondering what the steps forward are and how the on-boarding process is like.
These can be summarised into a few steps:
1) Offer Letter: This is where you provide us with your account and forecasts for the
current year and next two years, including a balance sheet. We will then show you
what our offer looks like in an offer letter.
2) Due-Diligence: If this is broadly in-line with your expectations, you will then be
sent a Due-Diligence Checklist which outlines the minimal information needed. The
most important being Audited Accounts.
3) After we have conducted our due-diligence, we will send you:
• Agglomeration Agreement
• Management Services Agreement
• Group Constitution
Typically joining an agglomeration can be done in a short time frame. Depending on
your due diligence and the state of the agglomeration you are joining, we can have
you as part of a listed company within three to six months.
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