Here's a simple guide on how to find companies that are looking to exit, either via an acquisition or an IPO:
Suggested search criteria:
Here's a run down of the criteria used:
Companies House status is active - we want to ensure that all companies in this search are still trading, otherwise we're wasting our time!
Current Stage of Evolution is not Zombie, Exited or Dead - we don't want to look at companies that are no longer trading, nor those that have already undergone an exit event (either IPO or Acquisition).
Any of their fundraisings have a post-money valuation of £10M - we want to look at later stage, larger companies that have an attractive valuation, and have proved they are a functional, mature company.
This will make them a more likely candidate to exit, as they will look better to investors / to their future acquiring company
At least 3 of their fundraisings match all of the following - we want companies that have undergone funding, as they are much more likely to undergo an exit event, and will have also likely grown at a faster rate too.
Total amount received through fundraising is at least £5m - As mentioned before, we want later stage companies, not those that have had just small raises to date.
Value of employees is at least 30, and turnover is at least £10M - once again, we want more established companies beyond the initial start up and scale up stage. Equally, the data behind this research suggest most companies are beyond this stage before exit (see below!)
Contents
Commentary + Top Tips
Relationships are King
Whilst spotting companies close to an exit event is a valuable piece of research, the late stage acquisition and IPO markets are very competitive. Rather than engaging with an established business where an exit event seems imminent, it may be more advantageous to build a relationship at an earlier stage before they're on everyone's radar.
You can use Beauhurst's notifications, timeline tabs and news articles to identify regular touch points with earlier-stage companies to ensure that your brand is front and centre in the company's mind as they plan for their exit.
Market Volatility will always be a factor
From 2020 to 2021, acquisitions involving at least one UK company jumped up by 68%, only to fall by 20% the next year, then rise back up by 19% in 2022-23. (Beauhurst data from years 2020 to 2023)
Market stability has a big influence on a business's attitude towards risk, and the decision to exit will always be among those most scrutinised.
Use Beauhurst's statistics tab, Explore, and other insight tools to ensure you know how the market looks currently, and whether now might not be the right time for companies to aim for a large liquidity event.
Do your Research
Standing out from the crowd by ensuring that you're speaking to the right people, at the right time, from a fully informed standpoint, will mean you have the leg up on competitors.
Due diligence is key in making sure that you come across as knowledgable about the business you're speaking to, and that you offer the most tailored and appropriate support for where they are at as a firm.
I'd recommend using people profiles to check if the person you're speaking to has led a company through an exit beforehand, to look up the amount of shares they hold or their directorship tenure ahead of a meeting with them to ensure you understand their seniority and influence in the firm.
Methodology
Below is an outline of the numbers from which the above search has been generated. I have combined research into 3 different cohorts, and used this as a guideline for the search, all based on data extracted from Beauhurst.
It's worth noting that predicting the exact time a company will exit is difficult to do, and will depend on the leadership team, industry and wider economic circumstances. It's for this reason why I have chosen to look at historical data, rather than what 'feels right' to inform this article.
These are the 3 research pieces used, and the key statistics taken from them.
2021-2023 Analysis of IPOs > A look into all companies who have exited through an IPO (Initial Public Offering) between 2021 and 2023.
2023 Analysis of Acquired Companies > A look into all companies that have exited through being acquired by a larger company in the year 2023.
2021-2024 Specific Cohort Analysis > This was a piece of tailored work I completed for a client, looking at all acquisitions of companies that have less than 20 shareholders, where at least one of the shareholders received between £10M-45M through the exit.
Metric to 3sf | 2021-2023 Analysis of IPOs | 2023 Analysis of Acquired Companies | 2021-2024 Specific Cohort Analysis |
Latest Post-Money Valuation | £267m | £31.5m | £25.5m |
No. of Fundraisings Received | 4 | 4 | 3.185 |
Total Amount received in fundraisings | £82.3m | £12.4m | £8.40m |
Amount Received in latest fundraising | £19.7m | £3.77m £1.00m | £4.32m |
Turnover | £86.0m | £25.8m | £32.9m |
Number of Employees | 325 87 | 122 | 92.5 |
EBITDA | - | - | £1.21m |
Cash | - | - | £4.45m |
If you have any questions on the above methodology, please get in touch with our team via the Intercom portal.