Growing up and moving out

Recent data has shown a surge in the number of UK tech businesses being acquired by US buyers. Our research puts the increase in acquisitions between the years 2009 – 2017 at 386%.

And in the last year alone, the value of deals involving US firms buying UK businesses has more than doubled, rising from £36.8bn in 2017 to £79bn in 2018.

And it does seem to be particularly the tech sector that US companies want. Of the 247 UK companies to have exited into the US in 2017, almost a third (32.3%) were technology companies. 

So what’s behind this sudden trend for tech start-ups growing up and moving out? 

And, importantly: is it the right option for everyone?

The UK tech sector: an attractive proposition
The huge increase in US acquisitions can partly be attributed to Brexit, which is weakening the pound. This has boosted American buying power, enabling US companies to snap up some of the UK’s most successful businesses at lower prices. 

But increased interest from the US is also a sign of confidence in the productivity and potential of the UK tech sector, which is far more active than it was just a decade ago. 

Silicon Valley no longer has ownership over innovation: the UK is clearly a hotbed for technological talent. 

You can exit during Brexit
The Brexit negotiations are ongoing, and there’s still a lot of uncertainty as to the future of the UK. This has left many businesses unsure about where they stand, or worried that now may not be the right time to exit. 

But there are lots of opportunities out there – especially in the US. The current climate actually makes it more important for companies within the UK to explore internationally. 

If you want to exit, and you’re in the right place to do it, then you shouldn’t let anything hold you back. There’s no time like the present. 

Before you go
If you have decided to exit, and you’re keen to see what the US can offer, we have some advice for you: 

• Growing a business is demanding, and the accounts don’t always seem a priority. But outdated books can become a hindrance when you’re looking to exit. An interested buyer wants you to prove your finances are sound. They may ask to see monthly accounts, end of year statements, cashflows and forecasts – and you should be able to provide them in minutes, not days or weeks. It’s crucial to have your finances sorted well in advance of finding a buyer – the moment you start thinking about your exit is the time to begin working with an external partner to organise the books. 
• Look around for the best option. If you do your research and shop around for multiple offers, you can choose an exit to suit you.
• Develop an exit action plan. You can take a few practical steps to increase the value and marketability of your business – things like reducing uncertainty, complications and risk to the acquirer. If you develop a plan to put yourself on top of your game, you’ll get the most out of your exit. 

Start-ups and SMEs in Britain have always been thriving – so it’s no real surprise that the rest of the world has started to notice.

And as US interest in the UK is growing, it’s a perfect time to be growing up and moving out. 

For help organising your accounts or preparing an exit plan, get in touch.