The future of FTSE 250 M&As
The pandemic sparked the foundation of more than 835,000 new businesses utilising technology and home delivery services to cater to a new market that a corridor of lockdowns created. Now, as restrictions ease, business models are revealing themselves with ‘set up to sell up’ structures, highlighting the shift in mentality between the business leaders of previous in contrast to those of today.
From Cornerstone with goals to sell for £100m 6 years after their foundation, to Co Op Energy that sold just 10 years after their foundation, mentalities of business leaders have affirmatively shifted. This mentality has fed into a deals market that is at an all time high. The UK has seen a blitz of IPOs from promising tech start-ups, with more in the pipeline, a trend that could transform the staid image of London’s old-economy-heavy stock market.
FTSE 250 companies are now keener than ever to acquire smaller businesses, either to increase their share of the market by acquiring rivals, or to possess new tech they do not have in house, further fuelling a buoyant deals market. Founders’ mentalities having shifted, seeing them more happy than ever before to sell, and FTSE 250 companies are taking note of the lean, innovative, and speedy solutions they can offer. The next 10 years could therefore be a true deals frenzy which professional service firms must be aware of and adapt to accordingly.
Chris Biggs, partner at Theta Global Advisors – a consultancy and accounting disruptor – has commented: “It is important to note the differentiation in goals of business leaders today. While previously, M&As might have seen business leaders looking to retain a degree of longevity and control of their businesses, mentalities have affirmatively shifted. The new generation of business leaders are setting up with short-term, lean structures and the goal of selling to major companies and investors. This attitudinal shift is seeing big businesses acquire far more small businesses, resulting in a booming deals market, during which we at Theta Global Advisors have been advising on both a variety of M&A processes as well as the acquisition by larger companies of these smaller start ups.
“Professional service firms must therefore keep this in mind when navigating these relationships, advising successful startups on how to attract investors and encourage acquisitions while keeping companies with the capital and desire to acquire aware of those startups with the potential to further scale their already global companies in the long run.
“Mid-sized professional service firms, such as Theta Global Advisors are ideally placed to facilitate the goals of these new business leaders, making the IPO process easier, simpler, and securing the funding needed to develop the innovative solutions that investors and FTSE 250 companies are looking for. Mid-sized professional service firms have taken on previously inaccessible major corporations, gaining experience and contacts here which will be essential for the start ups that have done well and are now looking to sell on so that they might move on to new ventures.”