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Jonathan Simnett, director at Hampleton Partners, on how UK tech entrepreneurs can prepare for M&A


I spoke to Jonathan Simnett, a director at Hampleton Partners, an M&A technology advisory firm, which has offices in London, San Francisco and Frankfurt.

Simnett spoke about the trends he’s noticed across the tech M&A environment, the impact of Brexit and shared his advice for tech entrepreneurs looking to sell or buy a technology company.

Q: Hi Jonathan, thank you very much for joining us. So, you’re a director at Hampleton Partners, can you tell us a little bit more about your firm does, please?

Hampleton does a really simple thing. Effectively, we sell small technology companies to big technologies and we call that M&A advisory.

It’s really important in technology because the rate of innovation is such that in order to thrive and prosper, firms need to have very active acquisitions strategies because they cannot innovate quickly enough internally.

Q: So, how would you say Hampleton Partners differs from say, any other M&A firm out there?

I think we have one very particular differentiator, in that all of us at Hampleton Partners have built multiple technology companies and sold them.

So, we have a very high degree of empathy with people who may be selling their firm for the first time, which is a very complex and also can be a very emotional experience.

Q: In terms of the deals that you’re working on, are you working on anything specifically here in the UK?

Well, the market is very very active in the UK at the moment.

There are some clear hot spots at the moment, such as augmented reality, virtual reality, AI, cybersecurity – which should come a surprise to nobody.

There are some very interesting areas where traditional industries are having to move forward to a new paradigm.

So, we’re seeing an enormous amount of activity in automotive, particularly around electric propulsion and self-driving vehicles and also a new wave in manufacturing, which we call Industry 4.0., where we are seeing some profound renaissance, particularly in the North of England.

Q: OK, that’s interesting and I have to ask, do you foresee Brexit impacting Hampleton’s business in any way?

We are not seeing anything at the moment. In fact, in many ways it’s actually quite positive because there is certainly interest in companies buying technology companies, which have offices both in the UK and on the continent.

Q: So, I hear you’ve just opened an office in Frankfurt. Is that in relation to Brexit at all?

We have. Yeah, we have opened in Frankfurt. It’s actually not primarily to do with Brexit, it’s simply a response to the amount of business that we are now doing in Germany.

However, there is a nuance in that. What we are noticing is that companies that have offices both in the UK and on the continent are now attracting premium prices because it’s one way that incoming companies feel they could de-risk against Brexit.

Q: What advice would give to any tech founders or tech entrepreneurs out there who may be considering a merger or an acquisition?

I think, you know, if you are an entrepreneur and you are founding a company, you need to think from the beginning that mergers and acquisitions will be part of your business strategy – either to sell or to buy.

We represent most firms on the sale side, so we are selling companies rather than looking at companies to buy, although we do do that as well.

It’s really, really important that you do a number of things when you’re building a business. Most important of all, is build a strong management team around you because firms that are acquisitors perceive a single founder running a business with 100% shareholding as a risk and you want to de-risk any acquisition.

Q: And in terms of looking ahead, what kind of trends do you foresee in the tech M&A environment over the next couple of years?

Well, I think what is very interesting is that there are plenty of tech firms buying other tech firms, but again, I think one of the most interesting things is where we are seeing firms that have come from what we think of now as traditional industries such as retailing having to move very, very quickly.

So, certainly retailing. Amazon absolutely rules the roost, everyone is scared about their next move, all their competitors are trying to keep up.

And, you know, we’ve seen Walmart in the States make five acquisitions in the last 14 months. Buying Parcel recently in New York, which is a delivery service and we’ve seen Carrefour, which is the world’s biggest supermarket buy Rue du Commerce, which is an online platform and we are going to see a lot more of that.

So, we are going to see companies buying into unfamiliar spaces as disruption continues to occur. We are going to see that in financial services as well, clearly London is a FinTech hub, and there are lots and lots of early-stage companies. Technologies like blockchain will fundamentally change the way we think about transactions and money payments and so on.

Certainly looks like we are looking at some interesting years ahead.

Oh, I think we are, yes.

Thank you very much for your time, Jonathan.

My pleasure.