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Weak pound could spur US takeovers of British startups

pound to dollar startup acquisitions

The sharp fall in the value of the pound and scrapping of banker bonuses may lead to a flurry of foreign takeovers of UK startups from the US and beyond, analysts have said.

The pound’s drop followed Chancellor Kwasi Kwarteng’s mini-budget, which included unfunded tax cuts and caused sterling to dip as low as $1.03 against the dollar on 26 September.

While the pound has since recovered following a £65bn intervention from Bank of England, historically it remains in a weakened state. It is down by 16% since this time last year, when it was worth $1.36, and has been on a downward trajectory since May 2021.

The recent and historic strengthening of the dollar against a weak pound makes it more attractive for US companies to acquire UK startups. Faced with a takeover offer, founders may be more likely to opt for an earlier exit than take the company up to an initial public offering (IPO)....