As a European venture-backed startup, you are more likely than not to exit to a European buyer. However the largest exits are outside of Europe, so you would be be well advised to look more broadly, particularly in the US, for your buyer.

The data from The State of European Tech 2018 Report by Atomico (based on the number of European VC-backed company exits) shows consistently over the past 4 years that more than 50% of European exits have been to European buyers, and this is growing.

Not surprisingly, the US and Canada region is the largest acquirer of European startups outside of Europe. What is more telling is that, although 32% of the European acquisitions were acquired by US based companies, they accounted for 59% of the overall European exit deal-value, according to Crunchbase report “Startup Transatlantic M&As US vs. EU”.

Looking at the largest 10 VC-backed M&A exits by deal-value for 2018 is instructive. Eight of these were sold to acquirers outside of Europe, of which six were U.S companies.

The top 2 exits were US-based, with Zoopla (UK) sold to US private equity fund, Silver Lakes for $3 billion, and iZettle (Sweden) sold to PayPal for $2,2 billion. Other US exits included Shazam (UK) to Apple for $400 million, Gram Games (Turkey) to Zynga for $250 million, NewVoiceMedia (UK) to Vonage for $250 million and MetaPack (UK) to Stamps.com for $230 million.

Non-US acquistions included games producers Trendyol (Turkey) sold to Alibaba in China for $728 million, and CCP Games (Iceland) sold to Pearl Abyss in South Korea for $425 million.

The two European exits were Mendix (Netherlands), sold to Siemens AG for $730 million, and Relayr (Germany), sold to Munich Re for $300 million.

Why are the largest acquisitions going to the US? The Crunchbase Report shows that 11 of the top 15 acquirers in the US and Europe are Silicon Valley companies. The highest ranked European acquirer – Germany’s SAP – ranks 33rd.

US acquisitions are generally larger. The median exit price in the US is $110 million versus $60 million in Europe. There are also huge amounts of un-deployed private equity capital, particularly in the US, seeking large, later-stage deals, as in the Silver Lakes acquisition of Zoopla. We are seeing a trend of later-stage startups often choosing a PE round as an alternative to an IPO.

China has been a sporadic buyer in Europe. Besides Trendyol in 2018, some of the notable acquisitions over the last couple years have been Supercell (Finland) for $8,6 billion, Skyscanner (UK) for $1,74 billion and Opera (Norway) for $600 million. Most of the large European acquisitions have been in the gaming or online travel sectors.

As a VC-backed startup, the chances are that a European company will acquire you. However, you will likely have a better exit if you can find a non-EU acquirer, particularly if you can find interest in the U.S. It is therefore well worth casting your geographical net wider  than the EU when embarking on your sale process.