M&As are big news in the UK right now, even in the midst of pandemic, but the challenge for businesses wanting to join the trend is how and when to begin an exit strategy.
The average age of a start-up at point of acquisition varies between sectors but sits at between six to 10 years according to statistics from Crunchbase.
The figures are lower for gaming, e-commerce, social media and market place companies, as well as content distributors and payment companies – and significantly higher for hardware specialists.
Back in the 1990s the process was quicker – Netscape exited the same year it was founded in 1994, Netflix waited only four years, Google five years and Amazon just two.
These days, investors often require evidence of a lot more revenue before making their move in a crowded market; so, the challenge for start-ups and SMEs is how to get noticed.
That’s where a focused, well-structured and strategic PR campaign can help. Building the media and public profile of a business can give the impression it is bigger and more influential than its turnover suggests; making it more attractive to potential buyers. Not just because it talks loudly but because of its audience size and potential for growth.
The tactic also delivers increased traffic to websites, along with potential sales growth, and can be even more compelling when combined with impactful brand and web design. In 2020, a business needs to look and taste good to be taken seriously, and many PR companies now partner with creative agencies, brand agencies and web designers to offer integrated campaigns. In this virtual age nothing is more likely to put off potential investors than a business with a car crash of a website which is impossible to navigate.
Appointing an external PR company at the right time to curate a campaign to raise the profile and identity of a business - with the long-term goal of making it M&A ready - has worked for many companies.
Take Checkatrade, now the most searched-for website for finding tradespeople in the UK and instantly recognisable through its adverts on daytime television.
Founder Kevin Byrne had already built a strong regional South East business when he appointed Midnight Communications in 2011 to raise its profile and help take the business national.
The company’s USP was its army of vetted tradespeople ‘members’, who all promised to meet The Checkatrade Standard, and just as importantly its innovative system of online reviews and feedback from customers who rated the jobs done in their homes.
A long-term PR campaign saw Checkatrade pitched as a national expert, protecting consumers from rogue traders, and its owner as a consumer champion.
The target was to increase visits to the website, increase the number of tradespeople signing up to be members and raise the profile of both the business and its founder to prepare it for acquisition.
Our tactics included national television and radio appearances for the founder as well as national and regional press coverage, high profile speaking opportunities and the use of brand ambassadors.
Fast forward five years, website traffic was significantly increased as well as new member sign-ups. The company was sold to HomeServe in 2017 for a reported £37m for the first 40% stake and £54m for the remaining 60%.
Checkatrade is not alone. Since 2017, M&A activity in the UK has continued to grow, even in these complicated times.
Some of the recent M&A events include ASDA being sold by Walmart for £6.8bn, William Hill set for a £2.8bn takeover by Caesars Casino, The AA under offer from private equity groups, Next buying up Victoria’s Secret, Boohoo moving in for Oasis and Warehouse and Brewers Carlsberg and Marston merging.
At the same time, SMEs and fast-growing startups are also eyeing up an exit strategy. Adding strategic PR and creative design to their armoury could be the key.