In a context where access to financing is becoming more and more complex, an increasing number of innovative companies are being considered for sale. Faced with uncertain future prospects, some start-up managers are opting to sell now. Experts from AURIS finance, a merger and acquisition consultancy, explain.
The study carried out by the investment bank Avolta for the daily Les Echos is formal: the trend in the ranks of French technology companies is to sell out. In the first half of 2022, 163 start-up companies were acquired by funds or companies. In the same period, thirty M&A transactions between start-ups took place, three times more than in the whole of 2020. This trend could accelerate in the coming months as the number of business owners looking to sell their companies increases.
Scarcity of Series B financing
This is due to the many macroeconomic uncertainties. These make it difficult for management and investors to plan for the medium and long term. The period of abundant liquidity, particularly from private equity funds, appears to be over. Acquirers are more vigilant than before. When they are not in a wait-and-see position, they are multiplying contract clauses to protect themselves in the event of a market downturn. Series B financings, i.e. for companies in a development phase raising between €2 million and €10 million, are particularly affected. Valuation levels are also being fiercely negotiated and multiples are no longer soaring.
The hard choice between refinancing and selling
In this context, many managers of innovative companies have to choose between refinancing and selling their companies. Concerned about the possibility of not being able to raise a new round of funding, start-up managers are asking their advisors to explore the possibility of an M&A. Despite the uncertain economic climate and the wait-and-see attitude of investors, many buyers are currently looking to position themselves on French tech companies. Among these, the unicorns are clearly diversifying their offer or consolidating their position in their market thanks to M&A operations. A year ago, for example, the insurtech Alan acquired the mental health application Jour for €20 million. More recently, Doctolib acquired Tanker, a company specialising in end-to-end encryption. This acquisition will enable the health appointment scheduling application to strengthen its position in managing cyber risk.
English-speaking international funds seduced by French technology
Beyond French companies, international investors continue to show a real infatuation with French gems. This is particularly true of English-speaking private equity funds. In the summer, the KKR fund renewed its support for French scaleup Contentsquare, which closed a new round of financing worth €600 million. Similarly, US investment fund Silver Lake recently positioned itself on Silae, a French player in payroll and human resources management could-based software. The acquisition was valued at €600 million.
Get the support you need
Business leaders want expert counsel more than ever in an unpredictable macroeconomic environment. Our specialists at AURIS Finance can assist you in making the best decision between selling and refinancing. Their sector specialisation enables them to identify potential buyers who understand the specifics of your business. AURIS Finance is there for you every step of the way, from sourcing investors to closing the sale, including due diligence.
