US expansion is a fantastic growth opportunity for UK companies if they successfully execute the right strategy for their business.
UK management teams are increasingly looking across the Atlantic to maximise their growth potential. In order to do this, leaders need to select the most effective strategy for their business model and ambitions.
ECI Partners, the leading growth-focused mid-market private equity firm, shares its top tips for creating a successful growth strategy in the US. Looking to address the challenges that can often arise, ECI draws on the experience of two portfolio companies, Moneypenny and MiQ, both of which are fantastic success stories in the North American market.
Consider acquisition versus organic carefully
The first question is whether you enter the US organically, or if an acquisition is preferable to develop the requisite scale, capabilities, or brand recognition your company is aiming for. There is no ‘correct route’ but selecting the most effective strategy for your business from the start will have a positive impact on the pace of your US expansion journey.
For example, Moneypenny initially chose an organic route to market but saw that acquisitions would drive a step-change in the scale. The business acquired VoiceNation and Ninja Number in 2020, drawing new talent and US market knowledge to the company. Meanwhile, MiQ knew they had the right tech and systems in place, so their expansion focus was on finding the right people to deliver their service, so the organic route effectively aligned with their goals.
Move people over
Another essential consideration is your people. For example, many companies choose to move some of the existing leadership team over to the US so that hiring policies and training are put in place by someone who is already embedded in the culture.
This works both ways, and Moneypenny regularly rotates team members across both sides of the Atlantic, bringing US talent to the UK, sharing best practice and focusing everyone on the same initiatives.
Moving someone over, especially someone from the leadership team can also create a better understanding of the workings of the US market – seeing the difference between US and UK sales first-hand. Cracking the US will usually involve personal commitment from the leadership team but investing your time at the start can make all the difference in the long run.
Consider your base carefully
There are several determining factors when considering your US base, such as whether the location is a big tech hub, a tax-friendly environment, or the availability of talent.
Despite the buzz, it’s not all about competitive locations like New York or LA, but it is important to think about where your key regional customer bases are located.
All practicalities should be considered – when Moneypenny opened its US HQ in Atlanta, it was a popular destination for its relevant potential client base in legal, finance and accounting and medical, it also has a well-connected airport meaning easy access to the UK. The critical communications services company had also realised the importance of choosing a good geographical location after having experienced hurricane-related disruption in Charleston, highlighting the importance of considering all possible criteria when launching a US base.
Recruiting in the US
All business leaders know how paramount top talent is for business growth, particularly when taking a leap internationally. For this reason many companies have an employee-led strategy, for example recruiting fantastic junior talent and putting faith in them to take on more senior positions, so they can then lead the growth story in the US. You may look to hire from your main competitors this way, demonstrating the career potential within your firm.
The hiring market in the US is very competitive – expectations around pay and benefits are very high and US talent excels at selling itself which can lead to easy missteps. Being prepared to pay up and move quickly to secure the right talent to lead your US operation is key.
Don’t give up
The first few years getting your company set up and established in the US can be a challenge. Those who have succeeded know it often requires commitment and investment, so it is important to hold your nerve as once you crack the US market the rewards and potential growth arc for your company can be extraordinary.
Brett Pentz, Vice President at ECI New York, comments: “The US represents a huge growth opportunity for businesses wanting to expand, but it can be a difficult market to crack. “When thinking about your growth strategy, it’s important to assess your business’ purpose for expansion, its goals and the specific conditions of the market before you start.
“To help get the most out of your expansion, it is really important to speak to people who have done it before, so you can get it right the first time, and once you’ve decided the right strategy for your business, grow at pace.”
ECI is a leading private equity investor, investing in growing businesses valued up to £300m. It has over 45 years of experience, collaborating with management teams to build successful global businesses. With an unrivalled track record of 267 investments, ECI invests as either a majority or a minority investor. ECI is currently investing its eleventh buyout fund and manages approximately £1.7 billion on behalf of our institutional investors.
www.ecipartners.com