As you will quickly see if you scan through our blog, we provide a lot of detailed advice and professional expertise spanning a whole array of M&A subjects. Today, however, we are going to embrace a blog with a little more levity as we delve into the fascinating – and fantastic – realm of UK startup deals.
Among the intriguing buzzwords and trends that you’ll find in this world of investors and entrepreneurs, words such as ‘unicorns’ and ‘hedgehogs’ are surprisingly commonplace. But what do these rather whimsical terms actually mean in the context of M&A – and what kind of ‘creature’ should you be looking out for if you want to make an investment with real growth potential?
Let’s find out!
Unicorns: rare, valuable and highly coveted
In the startup lexicon, a unicorn is the rather romantic title for a privately held startup company that has a valuation of at least $1 billion. Some of the characteristics of these mystical ‘entities’ include a powerfully innovative and marketable concept; a robust pitch that wows would-be investors; and a clear growth trajectory.
Because these businesses are so rare, it is said that finding a genuine startup unicorn is as rare as finding – well, a genuine mythical unicorn.
Some of the most famous unicorns in the startup world include household names like Uber and Airbnb. However, there have also been plenty of startups masquerading as unicorns which have turned out to be flops or frauds and failed to live up to their potential.
Consequently, investors need to be very careful when it comes to analysing the authentic value of a supposed unicorn. After all, by their very nature, the value of these startups is based on the expectations they are slated to meet, rather than existing tangible assets.
Hedgehogs: small, nimble and resourceful
On the other end of the startup spectrum, we have hedgehogs. This affectionate moniker refers to small ventures which often fly under the radar, but which have a strong focus on dominating a niche market or developing an innovative new product or technology. In short, a hedgehog specialises in doing just one thing – but doing it better than anyone else in the market.
Larger companies eyeing up M&A opportunities in the UK may want to consider acquiring a hedgehog. This kind of small, focused target allows you to tap into specialised expertise or technology that you may not currently have access to in your portfolio. What’s more, hedgehogs can usually be integrated quite seamlessly into a larger organisation, due to their size and agility, providing instant synergies without the complications that may come with a bigger acquisition.
Other creatures to consider
Hedgehogs and unicorns are perhaps the most intriguing opportunities for UK acquirers. However, the startup ecosystem is home to other ‘creatures’ too – such as zebras, for example.
What’s a zebra, you may ask? In a nutshell, a zebra is less glamorous than a unicorn – but also much lower risk. This is because zebras are enterprises that focus on social responsibility, community engagement, a steady and sustainable growth trajectory – and, of course, generating a profit. Zebras, then, are ideal acquisition targets for companies with a firm focus on making the world a better place as well as increasing profit margins.
Also focusing on sustainable long-term achievements rather than the huge and rapid growth of a unicorn, is the camel startup. This term refers to companies that prioritise survival and long-term profitability. Usually operating on a tight budget, camels can endure significant ups and downs with minimal support, slowly but surely expanding with the patience and resilience of their namesake animal.
The role of investors in fostering innovation
UK venture capitalists and angel investors have a powerful role in propelling British unicorns, hedgehogs and other startups into the limelight. By being bold enough to take calculated risks on unconventional concepts and technologies, these investors help to strengthen the UK startup community while also driving M&A activity.
While it may not always be easy to tell the unicorns from the horses with fake horns on their heads, investors with the courage to back a quirky concept can sometimes find themselves reaping significant rewards.
What’s more, the rise of social (or impact) unicorns is transforming the startup ecosystem for the better, pouring significant energy – and funds – into making the world of a better place.
The future of UK startup M&A
Looking ahead to the months and years to come, the world of startup mergers and acquisitions in the UK is sure to be a dynamic one, with its fair share of fantastic opportunities. As consumer preferences alter, new technologies rapidly emerge, the need for sustainability grows, and more bright young minds enter the ecosystem, there’s no denying that new doors are opening for M&A opportunities.
Eager investors sizing up innovative startups – whether camels, hedgehogs or those coveted unicorns – should keep their eyes peeled for the next big idea to take the business world by storm.
Final thoughts
Now you know more about the fantastic ‘entities’ inhabiting the realm of British startups, it’s time to plan your next big acquisition!
Whether your M&A strategy is tailored more to buying a unicorn or a zebra, it may be a good idea to have professional help to secure your deal. Here at Harris Acquire, we have a wealth of experience and expertise to draw upon, and our assistance could prove invaluable when it comes to securing your next startup.
From providing bespoke advice to verifying the best targets and streamlining negotiations and due diligence, our friendly and reliable team can be by your side every step of the way. Best of all, you can take advantage of our exclusive 30-day money-back guarantee, providing you with peace of mind as you track down your next target, unicorn or otherwise.
To find out more, be sure to give us a call on 01926 757100 or send an email to Hello@harrisacquire.com. We look forward to working with you!
