If you’ve been thinking about selling a business with international potential but the Brexit chaos has caused you to consider pressing pause on those plans, you’ll be interested to hear about the results of a recent survey by multinational professional services firm EY (Ernst & Young).
Britain is the world’s hottest investment destination
To identify the world’s hottest investment destination, EY surveyed 2,900 senior executives across 47 countries in February and March 2019. The survey put Britain on top for the first time in the poll’s 10-year history – despite Brexit uncertainty – knocking the United States off the top spot for the first time in five years.
Global interest in mergers and acquisitions at a 10-year high
The fall of the pound since the June 2016 vote to leave the European Union has made British assets cheaper. EY research revealed that global interest in mergers and acquisitions is at a 10-year high, with 59 percent of companies planning a deal in the next year, an increase from 52 percent a year ago.
Speaking about the results of the poll, Steve Krouskos, Global Vice Chair at EY, said Britain remained an “open environment for foreign investors” – a culture reinforced with the strong foundation of being English language speaking, as well as having a solid technology base and a skilled workforce.
Foreign investors are still keen to buy British
Krouskos describes disruption as being a driver for M&A rather than a barrier, saying “Deals are a means to reshape portfolios at an accelerated pace and futureproof businesses.”
“The increase in acquisition appetite is a clear indication that executives are focused on their pursuit of growth, underpinned by high expectations of their own future performance.”
Proof of an ongoing hunger for British business over the past 12 months is certainly available; just look at high-profile investments such as Comcast’s purchase of satellite broadcaster Sky for around 30 billion pounds (currently $39 billion) and Coca-Cola’s takeover of Costa Coffee for nearly 4 billion pounds ($5.2 billion).
As corporate finance experts, our own activity and successful sales to overseas buyers at the end of 2018 and beginning of 2019 certainly reflects an ongoing and healthy appetite for acquiring British companies.
It pays to market your business to overseas acquirers
In our recent article Know when you’ve won (and it’s time to sell a business) we suggested a number of signs that it could be the right time to sell your business – one of them being saleability in international markets. Even if you feel like a small fish in a big pond here in the UK, you could become the market leader in another country where the industry is less established, so it always makes sense to evaluate your global appeal.
We help our clients sell their businesses both domestically and internationally. In some cases, such as the recent sale of Distec Ltd to Kamic Group, the business is sold to a foreign buyer for a greater value that may otherwise have been achieved. There are a few reasons for this:
- International companies will often pay more for a transfer of new technology because it allows them to break important new ground and become trailblazers
- Your business might allow them access to new markets for their products, or your products might enable them to expand their offering to existing clients that they want to retain
- Operating in a new space – or operating more sophisticatedly in an existing space – creates more demand for their product or service (usually meaning they can charge more for it)
Marketing your company to the right overseas buyers creates a real buzz around your business – and more acquirers in the queue means more competition around offers. An international buyer will probably be prepared to pay a higher price for your business if they’re scared that a competitor is going to close the deal before them.
Don’t lose your sale in translation
Working with an experienced corporate finance company like Entrepreneurs Hub can help you tap into the largest number of potential buyers possible – those who have the means to offer the best pricing and terms for your company.
With experience in international markets, we can help you evaluate your global sales appeal, identify suitable buyers overseas, market your business effectively to them, and negotiate a successful sale that manages language barriers, cultural differences and currency/financing arrangements smoothly – leaving you to enjoy the next stage of your career and your life.
Looking to sell your business and want to include some international buyers in the mix?
Entrepreneurs Hub is an approachable corporate finance company helping business owners across the UK to sell businesses the smart way – at home and abroad. Contact us in confidence to discuss how we can help you.