December 4, 2019
Internationalisation is a key value creation strategy with nearly a third of all private-equity backed businesses which achieve exits reporting international revenues, drxDATA research shows.
A survey by drxDATA of all 252 exits achieved by UK private equity backed businesses in 2018/2019 found that 30% of all firms reported export revenue by the time they exited, up from 27% in the previous year.
Our research found that there was a right way and a wrong way to go about internationalising a business. It discovered that the most successful businesses grow their domestic business in tandem with an internationalisation strategy, but that the least successful businesses fail to grow their domestic business at the same time, which significantly compromises their overall performance.
The research also found that internationalisation delivered a significant additional benefit by expanding the exit opportunities for PE-backed businesses. drxDATA found that businesses which made an international acquisition through their hold period almost doubled their probability of being acquired by an international business from 41% to 78%, providing a potentially material boast to the potential valuation of the business on exit.
Over 75% of UK companies which have made international acquisitions are acquired by international companies, while the majority of UK companies without an international acquisition are acquired by UK companies.
Samuel Robberts, Head of drxDATA said: “It is clear that internationalisation can deliver considerable benefits to private equity backed businesses on many fronts. Our research shows that the potential value of pursuing an internalisation strategy lies far beyond merely the value created through the hold period, with potential exit routes almost doubling as a result, which in turn has a beneficial impact on the potential valuation of the business on exit. However firms which pursue an internationalisation strategy do need to ensure that they do this in parallel with growing their domestic business, otherwise the expected benefits may not materialise.”
drxDATA® is Drax’s proprietary data analytics platform which is used to develop unique data sets providing insights and analysis for our clients.
Drax contact: Samuel Robberts
Head of drxDATA
Tel: 0203 949 9565