M&A remains a pivotal cornerstone for founders looking to successfully build and exit their businesses — so where do you start? Both the UK and USA are major players in the game, each with their own pros, cons and quirks that influence the decision-making process.
For the latest in our Sifted Talks series, founders, deal veterans and legal leaders discussed the major differences between the US and UK processes, transatlantic strategies for the perfect exit and how to avoid jargon and contract fatigue while keeping control of the deal.
Our speakers were:
- Mark Barron, partner at law firm Taylor Wessing
- Husayn Kassai, CEO and founder of Quench.ai, a customer-identity verification scaleup
- Cleo Becker, chief legal officer at micro-mobility startup Dott
- And Dr Edzard Rothen, vice president of legal in Europe at venture capital firm General Catalyst
Here are the key takeaways from the panel:
1/ Stay on top of market conditions
Mark Barron from Taylor Wessing began with an update on the M&A market, noting that cash is currently scarce and highly valued, leading to more deals on the smaller side of the market.
“Buyers are looking at doing acquisitions, but because of the market conditions, cash is king, and cash is tough at the moment. We're seeing a lot of US buyers wanting to use stock and preserve cash resources.”
To navigate expensive capital, Barron highlighted that stock-based M&A deals are increasingly popular in the US. American dealmakers are urging European companies and investors to adopt US-style documentation to simplify cross-border transactions.
This trend is also evident at Dott, where Becker has been exploring M&A opportunities over the past two years. Becker noted that businesses are increasingly favouring all-share deals—where shares are used for acquisitions instead of cash.
“Access to capital is not what it was three to five years ago. Companies still want to grow. The easiest way for them to do that is through consolidation. For companies that want to conserve their cash resources, an all-share deal might be the best option.” — Cleo Becker, Dott
2/ Expect tension between founders and investors
The discussion turned to the tension between founders and investors regarding the timing and method of a company's exit strategy.
Kassai said that it wasn’t always his intention to exit Onfido via M&A, but as the business grew, his investors took over and began to drive discussions. While investors naturally focus on the exit strategy, Becker said founders are more concerned with growing the business.
"There can be a tension between what the founders want and what the investors want... To the extent that you can have early alignment with the board, I think it can really help with a successful exit and process." — Mark Barron, Taylor Wessing
3/ Make sure your team is complete
When asked whether startups need to hire new roles when preparing for a sale, Rothen at General Catalyst stressed the importance of having a complete team but clarified that such hires shouldn't be made solely for the M&A process.
"When you're looking to sell and it's imminent, it's probably the wrong time to hire. However, ahead of selling, you wouldn’t hire with the sole intent to sell but rather to professionalise the business — to grow further, become bigger, and ensure you have a clean, well-organised operation to present to potential buyers." — Dr Edzard Rothen, General Catalyst
4/ Demand value from third-party advisors
Hiring external bankers for the M&A process can be challenging. Kassai emphasised the importance of understanding their strategy, how they will present your company and the audience they aim to reach.
“Their fees are handsome, but having gone through the process, I can see why it is as such, because they do a really good job of putting you in the best light.”
Becker, who chose a law firm to represent them while dealmaking based on international reach, advised founders to seek firms capable of delivering on key aspects of the deal, whatever they might be.
“One of the best things about external advisors in an M&A deal, apart from their knowledge, is when these deals drag on, we certainly felt the deal fatigue. What I noticed from the law firms is they really keep the momentum on the deal. When you might have given up, they help bring things to a close.” — Cleo Becker, Dott
5/ Loose lips sink ships in M&A discussions
During the sale process, Rothen said founders are challenged to maintain confidentiality while ensuring the business continues to operate effectively, as a functional business is essential for a successful sale.
"While it does take quite a few people to handle this process, it's smart to keep the number of people in the know as high as necessary but as low as possible."
Kassai mentioned that they informed their wider team about two months before the startup was sold. Attention from the press followed shortly after. He cautioned that the press can be effective at getting information from your staff during the M&A process.
"Journalists can be very creative with their methods, but some basic training in a good culture should hopefully see you through it." — Husayn Kassai, Quench.ai
6/ Don’t fear mistakes, but plan your M&A deal carefully
While many advise against selling during a recession, Kassai believes the key is to “get the timing right.” To avoid mistakes, he emphasised the importance of setting measurable targets:
“What is it that you're measuring, and how much improvement would you want to see to make this worthwhile? Ensure that everyone is aligned with that and agrees it's possible before proceeding.”
Barron highlighted the complexities around term sheets — a document outlining the material terms and conditions of a potential business agreement — noting that a US buyer will be very sophisticated in negotiating a term sheet, so preparation is crucial.
“You’re not going to roll a buyer who’s agreed to a term sheet into representations and warranty insurance unless you’ve been really thoughtful upfront.” — Mark Barron, Taylor Wessing
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